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 Gulf Island Fabrication, Inc. (GIFI)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Wednesday, December 6, 2006, I bought GIFI, first for client accounts, then for my personal accounts. Gulf Island Fabrication, Inc. makes offshore drilling and production platforms and other specialized structures used in the development and production of offshore oil and gas reserves. Products include jackets and deck sections of fixed production platforms, hull and deck sections of floating production platforms, piles, wellhead protectors, sub-sea templates, and various modules. Here's why I bought this stock: + Technical: The stock has gone almost straight up since late September, when it was in the low 20's. Yesterday, the stock closed at $38.90. This morning, the stock dipped down to $36.12, down $2.78, before reversing course. Volume picked up as the stock climbed back quickly, turning the day's loss into a gain. Today's volume will come very close to eclipsing the 2-year record set on November 1. + Three quarters of dramatically accelerating sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -10%, +6%, +62%, and, most recently, for the quarter ended Sep 30, +141% to $90.5 million. + Two quarters of dramatically accelerating earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 22c vs 23c Mar 06 vs Mar 05: 16c vs 28c Jun 06 vs Jun 05: 43c vs 37c Sep 06 vs Sep 05: 75c vs 18c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is $1.88, revised upward from $1.42 90 days ago (and up from 2005 actual earnings of $1.05); and the consensus estimate for 2007 is $2.77, revised upward from $2.25 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 35%, the stock is very attractively priced. + History of earnings surprises: The company's earnings-per-share came in 21c above the First Call consensus for the quarter ended June 30, and 34c above for the most recent quarter, ended September 30. + The company's industry group ("Oil&Gas - Machinery / Equipment") is ranked #136 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 ideal entry point would have been in late October / early November. The stock is up about 10 points since then. However, the company's spectacular recent growth, projected growth, and very low valuation relative to that growth persuades me that this stock still has a long ways to run. -KD, December 6, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||