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 Skechers U.S.A., Inc. (SKX)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, October 26, 2006, I bought SKX, first for client accounts, then for my personal accounts. Skechers U.S.A., Inc. designs and markets branded contemporary casual, active, rugged, and lifestyle footwear for men, women, and children. The Company sells its products to department stores and specialty retailers. Skechers also sells its products internationally through distributors and directly to consumers through its own retail stores. Here's why I bought this stock: + News: Yesterday, after the close, the company announced results for the quarter ended Sep 30. Operating earnings came in at 46c per diluted share (vs 30c last year and First Call 40c). Revenue was up 21% to $331.1 million (First Call $317.4 million). They also said they now expect earnings of 22c to 27c per share for the fourth quarter (First Call 17c) on sales of $255 million to $265 million in sales (First Call $248.1 million).. + Breakout: The stock is up sharply today on extremely heavy volume. An hour-and-a-half after the opening bell, we have the stock up some 13% on more than 6x average daily volume. This is a breakout from a 6-month trading range. + Today, the stock is on track to meet 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: +8%, +13%, +11%, and, most recently, as cited above, +21%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Sep 05 vs Sep 04: 14c vs 5c Dec 05 vs Dec 04: 38c vs 25c Mar 06 vs Mar 05: 40c vs 38c Jun 06 vs Jun 05: 46c vs 30c + Strong earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $1.35, revised downward from $1.36 90 days ago (and up from 2005 actual earnings of $1.06); and the consensus estimate for 2007 is $1.50, revised upward from $1.49 90 days ago. + Valuation: At 20 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + The company's industry group ("Apparel - Shoes & Rel Mfg") is ranked #36 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally flat to slightly falling over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, October 26, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||