Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since October 31, 2005)Contents
Year-To-Date Performance
* An average of managed accounts, net after commissions and fees. Individual account results may vary. See also www.deencapital.com/perform.htm. For information on managed accounts, see www.deencapital.com/mgdaccts.htm.
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, November 3, 2005, I bought LOJN, first for client accounts, then for my personal accounts. LoJack Corp. develops and markets the LoJack System which is designed to assist law enforcement personnel in locating, tracking, and recovering stolen vehicles. The Company also develops and markets CarSearch, designated for use in international markets where it may not be practical or desirable to implement the fully integrated LoJack System. This stock is a component of the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 30c per diluted share (vs 21c last year and First Call 21c). Revenue was up 37% to $52.3 million (First Call $50.7 million). + A "true surprise"*: The stock has been locked in a trading range since mid-August. Then, this morning, the stock is soaring on extremely heavy volume. In just the first hour-and-a-half of trading, the stock is up 15% on more than 3x average daily volume. * "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term run-up in the stock price (i.e. not preceded by rumor). + Breakout: The price movement today represents a breakout from a two-and-a-half-month trading range to a new all-time high. + Today, the stock is on track to meet the stringent technical buy criteria outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +20%, +34%, +37%, and, most recently, as cited above, +37%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 18c vs 16c Mar 05 vs Mar 04: 14c vs 10c Jun 05 vs Jun 04: 26c vs 15c Sep 05 vs Sep 04: 30c vs 21c + Estimates predict sold earnings-per-share growth: According to recent data from First Call, the consensus earnings estimate for 2005 is 79c, revised upward from 75c 90 days ago (and up from 2004 actual earnings of 64c); and the consensus estimate for 2006 is 93c, revised downward from 94c 90 days ago. + Valuation: At 26 times next year's estimated earnings, the stock is moderately priced. (I do not have a projected 5-year growth rate for this stock.) + History of earnings surprises: I have very little earnings surprise history data available. I do see that for the quarter ending March 31, 2005, earnings were in line with estimates, and for the quarter ended June 30, earnings came in 8c ahead. (And, as cited above, the September 30 quarter was 9c ahead.) + The company's industry group ("Comml Svcs - Security/Safety") is ranked #42 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been fairly stable over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, November 3, 2005
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. ** Current prices are at least 20 minutes old. Welcome to The Deen's ListTM, an e-mail stock newsletter from Deen Capital Management, Inc. My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter. Your feedback is welcome. Send e-mail to deenslist@deencapital.com. To subscribe or unsubscribe, include the word "subscribe" or "unsubscribe" in the Subject line. This newsletter is free to managed account clients. For a limited time, it is also free to all interested parties. Your personal information, including your e-mail address, will be held in strict confidence by Deen Capital Management, Inc. We will not share it with or sell it to others. All stocks discussed in The Deen's ListTM involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's ListTM or purchased by Deen Capital Management, Inc. will be profitable. Past performance is not necessarily indicative of future results. The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness.
Ken Deen Copyright © 2005 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||