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.
* 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 DSW, first for client accounts, then for my personal accounts. DSW Inc., is a specialty branded footwear retailer operating in the United States. The Company offers a wide selection of brand name and designer dress, casual, and athletic footwear for women and men. This stock is a component of the IBD New America Index. This Index consists of 159 growth companies ranked highly by IBD. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Yesterday, after the close, the company announced results for the quarter ended Oct 28. Earnings came in at 36c per diluted share (vs 25c last year and First Call 27c). Revenue was up 10% to $332.2 million. Comparable store sales increased 2.6% versus a year ago. They now expect to earn $1.35 to $1.38 per diluted share in FY 07 (Jan). This supersedes their earlier projection of $1.24 to $1.27, and also beats the First Call consensus of $1.27. + A "true surprise"*: For two weeks prior to the news, the stock price was drifting generally lower. Then, today, the stock is soaring on extremely heavy volume. * "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: Today's price movement is a breakout from a five-month trading range to an all-time high. + 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 recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +22%, +12%, +9%, and, most recently, ,as cited above, +10%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Jan 06 vs Jan 05: 23c vs 21c Apr 06 vs Apr 05: 40c vs 28c Jul 06 vs Jul 05: 35c vs 26c Oct 06 vs Oct 05: 36c vs 25c + Rising earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for FY 07 is $1.27, unchanged from 90 days ago (but up from FY 06 actual earnings of $1.02); and the consensus estimate for FY 08 is $1.53, revised upward from $1.51 90 days ago. The FY 07 consensus estimate of $1.27 does not factor in the newly raised guidance from the company cited above ($1.35 to $1.38). + Valuation: At 25 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 5c above estimates in each of the past three quarters, including the just-reported quarter cited above, which was 9c above. + The company's industry group ("Retail - Clothing / Shoe") is ranked #19 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||