Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since November 28, 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, December 5, 2007, I bought MSFT, first for client accounts, then for my personal accounts. Microsoft Corp. develops, manufactures, licenses, sells, and supports software products. They offer operating system software, server application software, business and consumer applications software, software development tools, and Internet and intranet software. They also develop the MSN network of Internet products and services. This stock is a component of the S&P 500, the S&P 100, the NASDAQ 100, and the Dow Jones Industrial Average. Here's why I bought this stock: + Technical: After a huge earnings-surprise-driven breakout on October 26 (to a 7-year high) on extremely heavy volume, the stock continued higher for a few days, peaking around $37 in early November. But since then, it has been trending lower. The stock closed yesterday at a post-breakout low of 32.77. The stock has been continuously trading above its rising 50-day moving average since late September, but yesterday kissed that line. This morning the stock is bouncing off of this line, and I consider that a technical buy signal. Note that we are buying below the lowest price of October 26, the breakout day. Also note that this is not at all a failed breakout. In spite of recent weakness, the stock has also continuously traded above its pre-breakout highs. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +6%, +32%, +13%, and, most recently, for the quarter ended Sep 30, +27% to $13.8 billion. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 28c vs 33c Mar 07 vs Mar 06: 50c vs 32c Jun 07 vs Jun 06: 39c vs 31c Sep 07 vs Sep 06: 45c vs 35c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends June 30) is $1.81, revised upward from $1.72 90 days ago (and up from FY 07 actual earnings of $1.49); and the consensus estimate for FY 09 is $2.05, revised upward from $1.94 90 days ago. + Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 3c above estimates in three of the past four quarters. Most recently, for the quarter ended Sep 30, earnings came in 6c above estimates. + The company's industry group ("Computer Software - Desktop") is ranked #91 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, December 5, 2007
* Net buy prices include commissions. ** 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||