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. Bought Western Digital Corp. (WDC)
* 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, December 21, 2005, I bought WDC, first for client accounts, then for my personal accounts. Western Digital Corp. designs and manufactures hard drives for desktop computers and home entertainment applications. This stock is a component of the IBD 100 Index and the S&P 400 MidCap Index. Here's why I bought this stock: + Breakout: Today, the stock is breaking out decisively from a six-and-a-half month trading range. Volume is extremely heavy. As of an hour-and-a-half before the close, volume was already more than eight times the daily average, and a multi-year record. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +14%, +23%, +26%, and, most recently, for the quarter ended Sep 30, +23% to $1.01 billion. + Mostly excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 26c vs 32c Mar 05 vs Mar 04: 32c vs 22c Jun 05 vs Jun 04: 27c vs 14c Sep 05 vs Sep 04: 33c vs 14c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Jun) is $1.22, revised upward from $1.21 90 days ago (and up from FY 05 actual earnings of $1.00); and the consensus estimate for FY 07 is $1.33, revised upward from $1.28 90 days ago. + Valuation: At 14 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 a penny ahead of estimates in each of the past four quarters, and, most recently, the quarter ended Sep 30 was 4c ahead. + The company's industry group ("Computer Data Storage") is ranked #64 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, December 21, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||