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 20, 2006, I bought GOOG, first for client accounts, then for my personal accounts. Google Inc. provides a web based search engine through its Google.com website. The Company offers a wide range of search options, including web, image, groups, directory, and news searches. This stock is a component of the S&P 500 and the NASDAQ 100 Indices. Here's why I bought this stock: + News: Yesterday, Oct 19, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at $2.62 per diluted share (vs $1.51 last year and First Call $2.42). Revenue was up 70% to $2.69 billion (First Call $1.81 billion). + The company's recent acquisition of YouTube makes Google the dominant player in the emerging Internet video-sharing space. + Breakout: The stock is soaring this morning on heavy volume. This is a breakout from a 6-month trading range. Only six days in January of this year, when the stock was trading at or near $470, stand between the stock's present price and an all-time high. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +86%, +79%, +77%, and, most recently, as cited above, +70%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Sep 05 vs Sep 04: 1.54c vs 0.69c Dec 05 vs Dec 04: 2.29c vs 1.29c Mar 06 vs Mar 05: 2.49c vs 1.33c Jun 06 vs Jun 05: 2.62c vs 1.51c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $9.97, revised upward from $9.51 90 days ago (and up from 2005 actual earnings of $5.68); and the consensus estimate for 2007 is $13.07, revised upward from $12.62 90 days ago. + Valuation: At 35 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 31%, the stock is moderately priced. Yes, you heard me right. I'll say it again. At $456, it is moderately priced. It is an extraordinary price tag, but not at all too much for this level of extraordinary earnings and extraordinary growth. + History of earnings surprises: This company has reported earnings at least 15c above estimates in four of the past five quarters, including the just-reported quarter cited above, which was 20c 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 factor: - The company's industry group ("Internet Content") is ranked #167 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, October 20, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||