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 Allegheny Technologies Inc. (ATI)
* 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, November 30, 2006, I bought ATI, first for client accounts, then for my personal accounts. Allegheny Technologies, Inc. products include stainless steel, nickel-and cobalt-based alloys and super-alloys, zirconium and related alloys, and tungsten-based specialty materials. The Company also produces precision forgings and large grey and ductile iron castings. This stock is a component of the S&P 500 and the S&P 100. Here's why I bought this stock: + Breakout: Yesterday, Wed Nov 29, stock broke out of a six-month trading range to a 10-year (at least) high. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +15%, +18%, +34%, and, most recently, for the quarter ended Sep 30, +50% to $1.288 billion. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $5.44, revised upward from $5.13 90 days ago (and up from 2005 actual earnings of $3.32); and the consensus estimate for 2007 is $6.50, revised upward from $6.00 90 days ago. + Valuation: At 13.6 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 22c above estimates in each of the past three quarters. + The company's industry group ("Steel - Specialty Alloys") is ranked #113 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, November 30, 2006 Bought Dress Barn, Inc. (DBRN)
* 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, November 30, 2006, I bought DBRN, first for client accounts, then for my personal accounts. The Dress Barn, Inc. operates a national chain of value-priced specialty stores offering career fashion to working women. The Company's stores, operating principally under the names Dress Barn and Dress Barn Woman, offer in-season, moderate-price fashion apparel. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + News: Two days ago, Wednesday, after the close, the company announced results for the quarter ended Oct 28. Earnings came in at 40c per diluted share (vs 32c last year and First Call 37c). Revenue was up 12% to $358.4 million. Comparable store sales increased 7%. + A "true surprise"*: Prior to the news, the stock had been edging lower. On Wednesday, just before the news came out, the stock closed at a 2-month low. Then, yesterday, the stock soared 19%. Volume, at 5.9 million shares, was extremely heavy -- 6x the daily average and a 12-month record. * "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). + Breakout: The price movement yesterday was a breakout from an 8-week trading range to a 4-month high. The 10-year closing high is $27.13 set on May 1 of this year. I think the stock has a good chance of pushing through that mark within the next 2 months. + Yesterday, the stock met the stringent technical buy criteria outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Solid recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +55%, +11%, +12%, and, most recently, as cited above, +12%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 21c vs 6c Mar 06 vs Mar 05: 29c vs 17c Jun 06 vs Jun 05: 35c vs 22c Sep 06 vs Sep 05: 40c vs 32c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 07 (Jul) is $1.31, revised upward from $1.29 90 days ago (and up from FY 06 actual earnings of $1.15); and the consensus estimate for FY 08 is $1.48, revised upward from $1.47 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny above estimates in each of the past four quarters, including the just-reported quarter cited above, which was 3c above. + The company's industry group ("Retail - Clothing / Shoe") is ranked #18 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, November 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||