Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since November 8, 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 Ultra Clean Holdings, Inc. (UCTT)
* 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, November 13, 2006, I bought UCTT, first for client accounts, then for my personal accounts. Ultra Clean Holdings, Inc. develops and supplies critical subsystems for the semiconductor capital equipment industry, focusing on gas delivery systems. These gas delivery systems enable the precise delivery of specialty gases used in a majority of the key steps in the semiconductor manufacturing process. Here's why I bought this stock: + Excellent chart pattern. The daily average trading volume has exploded over the past two months. Most of it has been buying volume. I particularly like the way volume swells on up days and recedes on down days. That's been the pattern for the past six weeks. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -6%, +36%, +74%, and, most recently, for the quarter ended Sep 30, +278% to $104.1 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 7c vs 13c Mar 06 vs Mar 05: 16c vs 7c Jun 06 vs Jun 05: 22c vs 4c Sep 06 vs Sep 05: 29c vs (3c) + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is 87c, revised upward from 80c 90 days ago (and up from 2005 actual earnings of 14c); and the consensus estimate for 2007 is $1.20, revised upward from $1.12 90 days ago. + Valuation: At 11 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is attractively priced. I find this valuation particularly compelling as I suspect that 12% growth projection my be low. Next year's consensus earnings estimate, for example, is 34% above the 2006 consensus. + History of earnings surprises: This company has reported earnings at least a penny above estimates in three of the past four quarters. + The company's industry group ("Semiconductor Equipment") is ranked #89 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. I chose to buy the stock in spite of the following negative factor: - The stock broke out to new highs back in September at around $10. Now it's up around $13. I prefer to buy at the breakout. -KD, November 13, 2006
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||