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 NDS Group Plc ADS (NNDS)
* 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 NNDS, first for client accounts, then for my personal accounts. NDS Group plc supplies open conditional access software and interactive systems for the secure delivery of entertainment and information to television set-top boxes and personal computers. The company also develops secure datacasting solutions for the distribution of data and multimedia. Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 79c per diluted share (vs 61c last year and First Call consensus 58c). Revenue was up 25% to $204.9 million (First Call $188.7 million). + Market reaction: THe stock is up sharply today on extremely heavy volume. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +8%, +20%, +31%, and, most recently, as cited above, +25%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 52c vs 45c Mar 07 vs Mar 06: 50c vs 49c Jun 07 vs Jun 06: 70c vs 34c Sep 07 vs Sep 06: 79c vs 61c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends June 30) is $2.66, revised upward from $2.65 90 days ago (and up from FY 07 actual earnings of $2.33); and the consensus estimate for FY 09 is $3.09, revised upward from $3.06 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 24%, the stock is very attractively priced. + History of earnings surprises: This company beat estimates by 14c for the quarter ended June 30, and now they beat by 21c. + The company's industry group ("Computer Software - Enterprise") is ranked #9 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: - This is not a "true surprise". The stock was trading generally higher for four weeks leading up to the news.
-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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||