Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since July 28, 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, Thursday, September 21, 2006, I bought MERX, first for client accounts, then for my personal accounts. Merix Corp. manufactures printed circuit boards for use in sophisticated electronic equipment. The Company markets its products to the communications, computer, industrial, and medical instrumentation segments of the electronics industry. This stock is a component of the IBD New America Index. Here's why I bought this stock: + Breakout: The stock is up sharply today on heavy volume. This is a breakout from a 6-month trading range. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +20%, +43%, +90%, and, most recently, for the quarter ended May 31, +95% to $100.4 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Sep 05 vs Sep 04: 5c vs (6c) Dec 05 vs Dec 04: 3c vs 2c Mar 06 vs Mar 05: 14c vs 4c Jun 06 vs Jun 05: 19c vs (1c) + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (May) is $1.29, revised upward from 72c 90 days ago (and up from FY 06 actual earnings of 41c); and the consensus estimate for FY 08 is $1.47, revised upward from 97c 90 days ago. + Valuation: At 9.4 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17.5%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 5c above estimates in each of the past four quarters. + 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 company's industry group ("Elec - Contract Mfg") is ranked #116 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been up and down, without a clear trend, over recent weeks and months. -KD, September 21, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||