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, Tuesday, December 6, 2005, I bought PTRY, first for client accounts, then for my personal accounts. The Pantry, Inc. operates convenience stores in the southeastern United States. The Company's stores offer a variety of merchandise and gasoline, as well as ancillary services designed to appeal to the convenience needs of the customers. The Pantry's stores are located in Florida, North Carolina, South Carolina, Kentucky, Indiana, Tennessee, Virginia, and Georgia. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Last Thursday, December 1, before the open, the Company announced results for the quarter ended Sep 29. Earnings came in at $1.34 (excluding 22c in one-time charges) per diluted share (vs 67c last year [excluding 7c in charges] and First Call $0.96). Revenue was up 33% to $1.38 billion (First Call $1.32 billion). + News: On Wednesday, November 30, after the close (just hours before the earnings announcement), the Company announced the acquisition of 39 convenience stores in Mississippi and Louisiana. The stores generated total revenue of about $100 million in 2004. The Company's CEO indicated that he expects the acquisition to be immediately accretive to earnings. + A "true surprise"*: For about three weeks prior to the news, the stock price was overall falling slightly. Then, on Thursday, December 1, the stock soared 16% on more than 8x its 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 on Dec 1 represents a breakout from a four-month trading range into all-time high territory. + On Dec 1, the stock met 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: +26%, +20%, +26%, and, most recently, as cited above, +33%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: $0.60 vs $0.24 Mar 05 vs Mar 04: $0.16 vs $0.08 Jun 05 vs Jun 04: $0.75 vs $0.64 Sep 05 vs Sep 04: $1.34 vs $0.67 + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Sep) is $2.57, revised upward from $2.38 90 days ago (but down from FY 05 actual earnings of $2.87); and the consensus estimate for FY 07 is $3.05, revised upward from $2.74 90 days ago. + Valuation: At 15 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 5c ahead of estimates in each of the past four quarters, including the just-reported quarter cited above. + The Company's industry group ("Retail - Super/Mini Markets") is ranked #46 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. I chose to buy the stock in spite of the following negative factor: - The 2005 earnings estimate is slightly below 2004 actual earnings, as mentioned above. -KD, December 6, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||