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, Wednesday, October 4, 2006, I bought ORCL, first for client accounts, then for my personal accounts. Oracle Corp. supplies software for enterprise information management. The Company offers databases and relational servers, application development and decision support tools, and enterprise business applications. Oracle's software runs on network computers, personal digital assistants, set-top devices, PCs, workstations, minicomputers, mainframes, and massively parallel computers. This stock is a component of the S&P 500, the S&P 100, and the NASDAQ 100 Indices. Here's why I bought this stock: + Enthusiastic Market Reaction to Earnings Surprise: A couple of weeks ago, on Sep 20, there was a huge market reaction to a solid earnings surprise from Oracle. The stock was up $1.80, or 11%, on five times average daily volume. Since then, the stock has been trading in a sideways pattern. We were able to buy today at a price that is within the Sep 20 intraday range. + Breakout: On Sep 20, the stock closed above $17.26 for the first time since 2001, breaking through a resistance level set in January 2002. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +19%, +18%, +25%, and, most recently, for the quarter ended Aug 31, +30% to $3.59 billion. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Nov 05 vs Nov 04: 19c vs 16c Feb 06 vs Feb 05: 19c vs 16c May 06 vs May 05: 29c vs 26c Aug 06 vs Aug 05: 18c vs 14c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (May) is 97c, revised upward from 94c 90 days ago (and up from FY 06 actual earnings of 80c); and the consensus estimate for FY 08 is $1.11, revised upward from $1.08 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 13.3%, the stock is reasonably priced. + History of earnings surprises: This company has reported earnings at least a penny above estimates in each of the past three quarters. The most recent quarter, ended Aug 31, was 2c above. + The stock's 200-day moving average is rising, indicating a long-term uptrend. + Big-cap stocks have been outperforming small-caps lately. This gives us a little exposure to big caps in case this trend persists. I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Computer Sftwr - Enterprise") is ranked #45 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been overall falling, just slightly, over recent weeks and months. -KD, October 4, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||