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. Bought Apple Computer, Inc. (AAPL)
* 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 25, 2006, I bought AAPL, first for client accounts, then for my personal accounts. Apple Computer, Inc. designs, manufactures, and markets personal computers and related personal computing and communicating solutions. The Company's products are sold primarily to education, creative, consumer, and business customers. Apple provides its proprietary desktop and notebook computers, operating system, applications, music players, and online music store. This stock is a component of the IBD 100, the S&P 500, and the NASDAQ 100 Indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Last Wed Oct 18, after the close, the company announced results for for the quarter ended Sep 30. Earnings came in at 62c per share (vs 38c last year and First Call 51c). Revenue was up 32% to $4.84 billion (First Call $4.66 billion). + A "true surprise"*: Prior to the news, the stock had been in a sideways trading pattern for three weeks. Then, on Thu Oct 19, the stock jumped 6% on double 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). + Near-Breakout: The stock is currently at a 9-month high. Only 5 days in January stand between the current price and a 10-year high. (Perhaps an all-time high; my data only goes back 10 years.) + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +65%, +34%, +24%, and, most recently, as cited above, +32%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Sep 05 vs Sep 04: 65c vs 35c Dec 05 vs Dec 04: 47c vs 34c Mar 06 vs Mar 05: 54c vs 37c Jun 06 vs Jun 05: 62c vs 38c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (Sep) is $2.72, revised upward from $2.59 90 days ago (and up from FY 06 actual earnings of $2.27); and the consensus estimate for FY 08 is $3.20, revised upward from $3.04 90 days ago. + Valuation: At 25.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 4c above estimates in each of the past four quarters, including the just-reported quarter cited above, which was 11c above. + The company's industry group ("Computers - Manufacturers") is ranked #141 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. + This purchase increases my exposure to the large-cap universe, which recently has been outperforming small-caps. -KD, October 25, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||