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, Monday, October 30, 2006, I bought NTGR, first for client accounts, then for my personal accounts. NETGEAR, Inc. provides networking products designed for small businesses and homes. The Company's suite of products enables small businesses and homes to share Internet access, peripherals, digital content, and applications among multiple personal computers and other Internet-enabled devices. This stock is a component of the IBD 100 and the IBD New America Indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Last week, on Thu Oct 26, after the close, the company announced results for the quarter ended Oct 1. Non-GAAP earnings came in at 35c per diluted share (vs 27c last year and First Call 32c). Revenue was up 36% to $151.6 million (First Call $140.4 million). + Breakout: The next day, Fri Oct 27, the stock soared $3.84, or 16%, on more than 8x average daily volume. This was a breakout to an all-time high from a 5-month-plus trading range. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +16%, +17%, +22%, and, most recently, as cited above, +36%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Sep 05 vs Sep 04: 27c vs 23c Dec 05 vs Dec 04: 31c vs 25c Mar 06 vs Mar 05: 30c vs 25c Jun 06 vs Jun 05: 35c vs 27c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $1.29, revised upward from $1.21 90 days ago (and up from 2005 actual earnings of $1.02); and the consensus estimate for 2007 is $1.46, revised upward from $1.37 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 2c above estimates in each of the past three quarters, including the just-reported quarter cited above, which was 3c above. + The company's industry group ("Computer Networking") is ranked #2 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. -KD, October 30, 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. The Deen's List Copyright © 2006 Deen Capital Management, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||