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.
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Tuesday, October 30, 2007, I bought AMED for one of my personal managed accounts only. (All other accounts are fully invested.) Amedisys, Inc. is a multi-regional provider of alternate-site health care services. The Company offers home health care nursing, home infusion therapy, and ambulatory surgery centers. They operate offices within a network of subsidiaries in the southern and southeastern United States. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + News: This morning, Oct 30, before the open, the company announced results for the quarter ended Sep 30. Excluding a one-time gain, earnings came in at 61c per diluted share (vs 48c last year and First Call consensus 56c). Revenue was up 32% to $180.9 million (First Call $175.3 million). + A "true surprise"*: For almost three weeks prior to the news, the stock was edging mostly lower. It closed yesterday at a 3-month low. Then, this morning, the stock is soaring 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 big price move today, if it holds into the close, represents a breakout from an 11-week trading range to a new 10-year (at least) 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: +21%, +21%, +27%, and, most recently, as cited above, +32%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 51c vs 34c Mar 07 vs Mar 06: 51c vs 36c Jun 07 vs Jun 06: 57c vs 42c Sep 07 vs Sep 06: 60c vs 48c + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny above estimates in four of the past five quarters, including the just-reported quarter cited above, which was 5c above estimates. + The company's industry group ("Medical - Outpatient / Home Care") is ranked #100 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: - Strong but falling earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2007 is $2.21, revised downward from $2.22 90 days ago (but up from 2006 actual earnings of $1.78); and the consensus estimate for 2008 is $2.31, revised downward from $2.48 90 days ago. -KD, October 30, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||