Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since October 26, 2007)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 OSI Pharmaceuticals Inc. (OSIP)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Friday, October 26, 2007, I bought OSIP, first for client accounts, then for my personal accounts. OSI Pharmaceuticals, Inc. is a pharmaceutical research and development company commercializing its skills in drug discovery, pre-clinical research, and drug development. Their research programs are focused in the areas of cancer therapeutics, cosmeceuticals, diabetes, and G-protein coupled receptor-directed drug discovery. Here's why I bought this stock: + News: Yesterday, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 59c per diluted share (vs 1c last year and First Call consensus 41c). Revenue was up 77% to $100.4 million (First Call $87.0 million). + A "true surprise"*: For a week prior to the news, the stock was trading sideways to slightly lower. Then, today, the stock soared 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: That price jump today represents a breakout from a four-month trading range to a 2-year 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: -4%, +31%, +42%, and, most recently, as cited above, +77%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: (1c) vs (12c) Mar 07 vs Mar 06: 35c vs 5c Jun 07 vs Jun 06: 42c vs (4c) Sep 07 vs Sep 06: 59c vs 1c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2007 is $1.41, revised upward from $1.19 90 days ago (and up from 2006 actual earnings of 1c); and the consensus estimate for 2008 is $1.65, revised upward from $1.38 90 days ago. + Valuation: At 25 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 21%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 13c above estimates in each of the past four quarters, including the just-reported quarter cited above, which was 18c above. + The company's industry group ("Medical - Biomed/Biotech") is ranked #35 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, October 26, 2007 Bought ScanScource Inc. (SCSC)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Friday, October 26, 2007, I bought SCSC, first for client accounts, then for my personal accounts. ScanSource, Inc. is a value-added wholesale distributor of specialty technology products to the reseller market. The Company provides automatic identification and point-of-sale products, as well as telephony and computer telephony integration products. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + News: Yesterday, Oct 24, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 56c per diluted share (vs 48c last year and First Call consensus 48c). Revenue was up 12% to $553.7 million (First Call $544.1 million). + A "true surprise"*: For three weeks prior to the news, the stock was trading mostly lower. Then, today, the stock soared 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 3-year trading range to a 10-year (at least) high. + Today, 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 recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +16%, +21%, +14%, and, most recently, as cited above, +12%. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 45c vs 34c Mar 07 vs Mar 06: 46c vs 35c Jun 07 vs Jun 06: 48c vs 49c Sep 07 vs Sep 06: 56c vs 48c + Rising earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends June 30) is $1.91, revised downward from $1.92 90 days ago (and up from FY 07 actual earnings of $1.86); and the consensus estimate for FY 09 is $2.11, revised upward from $1.82 90 days ago. + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 4c above estimates in each of the past five quarters, including the just-reported quarter cited above, which was 8c above. + The company's industry group ("Retail/Wholesale - Computer/Cell") is ranked #62 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, October 26, 2007
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. 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 © 2007 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||