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, December 29, 2005, I bought QDEL, first for client accounts, then for my personal accounts. Quidel Corp. discovers, develops, manufactures, and markets rapid diagnostic products for point-of-care detection of human medical conditions and illnesses. The Company's products provide diagnoses for acute and chronic conditions in the areas of women's health and infectious diseases. Quidel's products are sold to professionals and to consumers. Here's why I bought this stock: + News: This morning, before the open, the company announced that it has received FDA clearance to make new claims regarding its 10-minute diagnostic test for influenza. Among the new claims the company can now make for this test is 94% sensitivity for the detection of influenza A using nasal swab specimens. + A "true surprise"*: Prior to the news, the stock was in a short-term downtrend. The stock price has fallen from a 10-year (at least) closing high of $15.51 on Nov 28 to a low of $9.47 yesterday. Then, this morning, the stock is soaring on extremely heavy volume. As I write this, about an hour and 40 minutes before the close, volume is more than 16x average, and at least 10-year record. * "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). + 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 . + Strong recent sales growth (for the past three quarters): Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -1%, +17%, +7%, and, most recently, for the quarter ended Sep 30, +47% to $20.0 million. + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is 25c, revised upward from 21c 90 days ago (and up from 2004 actual earnings of 5c); and the consensus estimate for 2006 is 42c, revised upward from 40c 90 days ago. + History of earnings surprises: No earnings surprise history was available on this stock. + In spite of the short-term downtrend cited above, he stock's 200-day moving average is rising, indicating a long-term uptrend. The technical buy signal on this stock is exceptionally strong, so much so that I want to buy in spite of the following considerations: - Spotty recent quarterly earnings. Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 19c vs 35c Mar 05 vs Mar 04: 4c vs 2c Jun 05 vs Jun 04: (4c) vs (5c) Sep 05 vs Sep 04: 2c vs (11c) - Valuation: The stock is trading at 28.5 times next year's earnings. This could be expensive, or it could be cheap. In the absence of an annualized projection for the company's annualized earnings growth rate over the next 5 years, it's hard to say. - The company's industry group ("Medical Products") is ranked #91 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, December 29, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||