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, October 6, 2006, I bought CPRT, first for client accounts, then for my personal accounts. Copart, Inc. provides vehicle suppliers, primarily insurance companies, with a variety of services to process and sell salvage vehicles through auctions. Salvaged vehicles are primarily sold to licensed dismantlers, re-builders, and used vehicle dealers. This stock is a component of the S&P 400 MidCap Index. Here's why I bought this stock: + News: Two days ago, Wednesday, after the close, the company announced results for the quarter ended Jul 31. Diluted earnings-per-share from continuing operations came in at 33c (vs 27c last year and First Call 29c). Revenue was up 24% to $137.2 million (First Call $130.4 million). + A "true surprise"*: The day before the news, the stock fell $1.34, or 4.6%, on about 5 times average daily volume. Then, yesterday, Thursday, the stock jumped $2.43, or 8.8%, on more than 10 times 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). + Successful test of breakout pivot point: The stock broke out of a 5-month trading range back on August 15. The pivot point for this breakout was around $27 to $27.50. Since then, it has performed fairly well, up until Wednesday, two days ago, when that 4.6% drop I mentioned took the price back down to the pivot point. Thursday's jump, then, was a very successful test of that support level. + Yesterday, Thursday October 5, 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 . + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +15%, +16%, +17%, and, most recently, as cited above, +24%. + Accelerating recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Oct 05 vs Oct 04: 24c vs 24c Jan 06 vs Jan 05: 26c vs 25c Apr 06 vs Apr 05: 36c vs 33c Jul 06 vs Jul 05: 33c vs 27c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (Jul) is $1.38, up from $1.37 90 days ago (and up from FY 06 actual earnings of $1.19). + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least a penny above estimates in three of the past five quarters. The most recent quarter, cited above, was 4c above. + The company's industry group ("Comml Svcs - Miscellaneous") is ranked #38 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, October 6, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||