Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since November 1, 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, Wednesday, November 28, 2007, I bought DRYS, first for client accounts, then for my personal accounts. DryShips Inc. owns and operates vessels which carry drybulk commodities such as coal, iron ore, grains, and steel products. This stock is a component of the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + I'm still skeptical of this rally, as my three primary indicators have improved only slightly (to one neutral, two bearish). Even so, again within the context of a high-cash, low-risk portfolio, I am putting one more toe in the water. One bullish sign: A double-bottom chart pattern in the S&P 500. + Technical Buy Signal: The stock today is breaking a strong downtrend line that has since it peaked on October 29. Since then, the stock has fallen from $131.54 on Oct 29 all the way down to $69.67 two days ago on Nov 26. This four-week downtrend, big as it is, comes in the context of a monster long-term uptrend, which is still intact. Twelve months ago, the stock was in the teens! The 200-day moving average has been continuously rising, and the stock has been continuously well above that moving average line, even at its recent trough. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +28%, +58%, +106%, and, most recently, for the quarter ended Sep 30, +150% to $150.0 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: $0.77 vs $0.76 Mar 07 vs Mar 06: $1.01 vs $0.60 Jun 07 vs Jun 06: $1.59 vs $0.10 Sep 07 vs Sep 06: $2.38 vs $0.11 + Sharply rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2007 is $9.43, revised upward from $6.90 90 days ago (and up from 2006 actual earnings of $1.61); and the consensus estimate for 2008 is $17.65, revised upward from $8.94 90 days ago. + Valuation: At 5 times next year's estimated earnings, the stock is attractively priced. (The long-term projected earnings growth rate is not available.) + History of earnings surprises: This company has reported earnings at least 4c above estimates in each of the past four quarters. Most recently, earnings for the quarter ended Sep 30 came in 4c above estimates. I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Transportation - Ship") is ranked #44 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, November 28, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||