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, Friday, September 29, 2006, I bought AZZ, first for client accounts, then for my personal accounts. AZZ Inc. manufactures specialty electrical equipment and components for the global power generation, power transmission, and distribution markets. The Company also provides hot dip galvanizing services to the steel fabrication industry across the United States. Here's why I bought this stock: + News: This morning, before the open, the company announced financial results for the quarter ended Aug 31. Earnings came in at 90c per diluted share (vs 24c last year and First Call consensus 40c). Revenue was up 31% to $62.9 million. + Market reaction: The stock is up sharply today on extremely heavy volume. + Breakout: The price movement today represents a breakout from a six-week trading range. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +16%, +33%, +17%, and, most recently, as cited above, +31% to $62.9 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Nov 05 vs Nov 04: 30c vs 22c Feb 06 vs Feb 05: 45c vs 26c May 06 vs May 05: 71c vs 38c Aug 06 vs Aug 05: 90c vs 24c + Solid earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (Feb) is $2.01, unchanged from 90 days ago (and up from FY 06 actual earnings of $1.38); and the consensus estimate for FY 08 is $2.25, unchanged from 90 days ago. + Valuation: At 16 times next year's estimated earnings, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 7c above estimates in three of the past four quarters, including the just-reported quarter cited above, which was 50c above. + 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 factors: - The news this morning was not, strictly speaking, a "true surprise", since the stock was up about two points yesterday. - The company's industry group ("Electrical - Equipment") is ranked #117 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily. It has been generally falling over recent weeks and months, though it did tick up strongly yesterday. -KD, September 29, 2006 Sold U.S. Global Investors, Inc. (GROW) -11.6% (after commissions)
* The net buy (sell) price is the total net cost (proceeds) after commissions for all managed accounts divided by the total number of shares. GROW is down sharply today on heavy volume, and is likely to close below my hard stop-loss price of $26. I still like this stock, but, technically, the recent breakout is failing today. Time to cut our loss. -KD, September 29, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||