Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since December 18, 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 On Semiconductor (ONNN)
* 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 20, 2006, I bought ONNN, first for client accounts, then for my personal accounts. ON Semiconductor supplies analog, standard logic, and discrete semiconductors for data and power management. ON also offers discrete semiconductors in a variety of surface mount and standard packages. Here's why I bought this stock: + Breakout: Almost two weeks ago, on Dec 7, this stock broke out in dramatic fashion from a 9-month trading range on extremely heavy volume. It was up 72c that day, or 10.6%, to $7.52. A 2-day dip Monday and Tuesday of this week may have created a buying opportunity. + On Dec 7, 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 . + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +11%, +10%, +24%, and, most recently, for the quarter ended Sep 30, +34% to $420.9 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 05 vs Dec 04: 13c vs 4c Mar 06 vs Mar 05: 12c vs 4c Jun 06 vs Jun 05: 20c vs 5c Sep 06 vs Sep 05: 23c vs 6c + Valuation: At 10 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 a penny above estimates in each of the past four quarters. The most recently reported quarter, ended Sep 30, was 3c above + The company's industry group ("Elec - Semiconductor Mfg") is ranked #38 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: - Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2006 is 71c, revised downward from 73c 90 days ago (but up from 2005 actual earnings of 28c); and the consensus estimate for 2007 is 76c, revised downward from 84c 90 days ago. -KD, December 20, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||