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, Wednesday, November 30, 2005, I bought DBRN, first for client accounts, then for my personal accounts. The Dress Barn, Inc. operates a national chain of value-priced specialty stores offering career fashion to working women. The Company's stores operate principally under the names Dress Barn and Dress Barn Woman. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended Oct 29. Earnings came in at 64c per diluted share (vs 24c last year and First Call 40c). Revenue was up 62% to $318.9 million (First Call $318.9 million). + News: Also this morning, before the open, the company reported that sales for the four-week period ended Nov 26 were up 60% versus a year ago, and comparable store sales were up 10%. + News: The company also raised guidance for FY 06 (Jul) to the range $1.90 to $1.95. That's well above the First Call consensus of $1.65. + Enthusiastic market reaction: At the time I decided to buy, just over two hours after the opening bell, the stock was already up some 20% on a huge volume spike -- already more than 8x average daily volume. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +17%, +61%, +48%, and, most recently, as cited above, +62%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 12c vs 16c Mar 05 vs Mar 04: 33c vs 19c Jun 05 vs Jun 04: 45c vs 33c Sep 05 vs Sep 04: 64c vs 24c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 is $1.65, revised upward from $1.49 90 days ago (and up from FY 05 actual earnings of $1.14); and the consensus estimate for FY 07 is $1.81, revised upward from $1.70 90 days ago. (That $1.49 number for FY 06 is now trumped by new guidance from the company, cited above, of $1.90 to $1.95.) + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17.5%, the stock is not over-priced. + The company's industry group ("Retail - Clothing/Shoe") is ranked #34 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, November 30, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||