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 Allis-Chalmers Corp. (ALY)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Tuesday, November 28, 2006, I bought ALY, first for client accounts, then for my personal accounts. Allis-Chalmers Energy Inc. provides a variety of products and services to the oil and natural gas drilling industry through it subsidiaries. The Company provides equipment and operations to install casing and production tubing required to complete oil and gas wells. Allis-Chalmers also provides a range of drilling services and drill pipe. Here's why I bought this stock: + Poised to break out? This stock is just over a point away from an all-time closing high. The big-volume days recently have all been up days. It's met resistance the past 3 weeks just below the $19 mark. This looks like a prelude to a breakout. + Spectacular and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +127%, +143%, +156%, and, most recently, for the quarter ended Sep 30, +197% to $85.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 14c vs (4c) Mar 06 vs Mar 05: 23c vs 11c Jun 06 vs Jun 05: 50c vs 12c Sep 06 vs Sep 05: 50c vs 14c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $1.73, revised upward from $1.70 90 days ago (and up from 2005 actual earnings of 51c); and the consensus estimate for 2007 is $2.12, revised upward from $2.03 90 days ago. + Valuation: At 8.5 times next year's estimated earnings, the stock is attractively priced. (The projected 5-year annualized earnings growth rate is not available.) + History of earnings surprises: This company has reported earnings at least 4c above estimates in each of the past three quarters. (The most recent quarter, ended Sep 30, was 4c above.) + The stock's 200-day moving average is rising, indicating a long-term uptrend. + Exposure to oil: The stock market has been on a tear since July, and the price of oil has been going the other way. Yesterday's big selloff in stocks (accompanied by an uptick in oil) just might signal a trend reversal, both for stocks and for oil. This stock has performed very well in recent months, even in the face of falling oil; it could perform even better if oil begins to rise. I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Oil&Gas - Field Services") is ranked #87 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, November 28, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||