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, Monday, December 4, 2006, I bought STEC, first for client accounts, then for my personal accounts. SimpleTech, Inc. designs, manufactures, and markets memory, storage, and connectivity products used in high performance computing, networking and communications, consumer electronics, and industrial applications. Here's why I bought this stock: + News: This morning before the open, the company raised its earnings forecast for the fourth quarter ending Dec 31. They now expect to earn 17c to 18c on revenue of $105 million to $107 million. Previous guidance called for 15c to 16c on $95 million to $100 million. The First Call consensus was for 15c on $97.8 million. + A "true surprise"*: Yesterday, the stock closed at a 2-week low. 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: The price movement today represents a breakout from a four-and-a-half-month trading range. + 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 and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -19%, +7%, +13%, and, most recently, for the quarter ended Sep 30, +38% to $92.8 million. The current fourth quarter should be better than +65%, based on today's press release. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 2c vs 6c Mar 06 vs Mar 05: 2c vs 2c Jun 06 vs Jun 05: 10c vs 4c Sep 06 vs Sep 05: 14c vs 4c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is 41c, revised upward from 32c 90 days ago (and up from 2005 actual earnings of 12c); and the consensus estimate for 2007 is 58c, revised upward from 44c 90 days ago. + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + History of meeting or beating estimates: This company has reported earnings in line or a penny above estimates in each of the past four quarters. The current quarter, we now learn, should be 2c to 3c above estimates. + The company's industry group ("Elec - Semiconductor Mfg") is ranked #66 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, December 4, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||