Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since March 17, 2006)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, May 3, 2006, I bought ANEN, first for client accounts, then for my personal accounts. Anaren, Inc. designs, develops, manufactures, and sells integrated microwave component assemblies and subsystems. The Company serves the wireless communications, satellite communications, and defense electronics markets. Here's why I bought this stock: + News: Last Thursday, April 27, after the close, the company announced results for the quarter ended March 31. Excluding stock-based compensation expense, operating earnings came in at 22c per diluted share (vs 9c last year and First Call 15c). Revenue was up 23% to $26.7 million (First Call $24 million). + A "true surprise"*: Prior to the news, for the prior four weeks, the stock had been trending lower. Then, on Friday, April 28, the stock soared 14% on more than 7x 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 April 28 was a breakout from a four-year trading range. + On April 28, 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 . + Turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -3%, -1%, +6%, and, most recently, as cited above, +23%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Jun 05 vs Jun 04: 14c vs 12c Sep 05 vs Sep 04: 17c vs 10c Dec 05 vs Dec 04: 17c vs 8c Mar 06 vs Mar 05: 22c vs 9c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Jun) is 77c, revised upward from 65c 90 days ago (and up from FY 05 actual earnings of 41c); and the consensus estimate for FY 07 is 88c, revised upward from 74c 90 days ago. + Valuation: At 24 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock price is at least within reason. + History of earnings surprises: This company has reported earnings at least 2c above estimates in each of the past four quarters, including the just-reported quarter cited above, which was 7c above. + The company's industry group ("Telecom - Wireless Equipment") is ranked #49 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising (just slightly) over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, May 3, 2006
* 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 © 2006 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||