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 Foundry Networks Inc (FDRY)
* 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, October 29, 2007, I bought FDRY, first for client accounts, then for my personal accounts. Foundry Networks, Inc. designs, develops, manufactures, and markets a suite of high performance networking products. Here's why I bought this stock: + News: Last Thursday, Oct 25, after the close, the company announced results for the quarter ended Sep 30. Non-GAAP earnings came in at 23c per diluted share (vs 15c last year and First Call consensus 17c). Revenue was up 34% to $159.5 million (First Call $148.1 million). + A "true surprise"*: Prior to the news, last Wednesday, the stock closed at a 3-week low. Then, on Friday, it soared $1.95, or 10.8%, on extremely heavy volume, almost 5x average. * "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). + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +14%, +19%, +32%, and, most recently, as cited above, +34%. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 10c vs 13c Mar 07 vs Mar 06: 14c vs 11c Jun 07 vs Jun 06: 15c vs 9c Sep 07 vs Sep 06: 23c vs 15c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2007 is 65c, revised upward from 64c 90 days ago (and up from 2006 actual earnings of 46c); and the consensus estimate for 2008 is 79c, revised upward from 78c 90 days ago. + Valuation: At /\ times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock is /\attractively priced. + 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 company's industry group ("Computer Networking") is ranked #46 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. -KD, October 29, 2007
* 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 © 2007 Deen Capital Management, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||