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, Thursday, December 6, 2007, I bought OTEX, first for client accounts, then for my personal accounts. Open Text Corp. provides intranet, extranet, and corporate portal solutions to organizations around the world. Their flagship product, Livelink, is an off-the-shelf, enterprise scalable, collaborative application allowing companies to leverage their information and resources through intranets. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + True, I just sold this on Tuesday. That was a risk management move in the face of my overall bearish and weakening indicators. Market internals have improved since then, and I'm now willing to take on more risk. Also, our entry price is slightly lower this time around. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +47%, +55%, +62%, and, most recently, for the quarter ended Sep 30, +62% to $164.0 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 35c vs 31c Mar 07 vs Mar 06: 34c vs 27c Jun 07 vs Jun 06: 52c vs 31c Sep 07 vs Sep 06: 43c vs 24c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends June 30) is $1.88, revised upward from $1.78 90 days ago (and up from FY 07 actual earnings of $1.46); and the consensus estimate for FY 09 is $2.13, revised upward from $2.01 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 19%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 3c above estimates in each of the past four quarters. Most recently, earnings for the quarter ended Sep 30 came in 7c above estimates. + 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 Software - Enterprise") is ranked #12 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been falling very slightly over recent weeks and months. -KD, December 6, 2007 Bought Pericom Semiconductor (PSEM)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, December 6, 2007, I bought PSEM, first for client accounts, then for my personal accounts. Pericom Semiconductor designs, develops, and markets interface integrated circuits for the transfer, routing, and timing of high-speed digital and analog signals. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + Technical: There was a huge earnings-surprise-driven breakout on October 31. The stock made another big up move on November 5, and has been trading in a sideways pattern since then, digesting (and holding onto) its gain. One of my primary metrics in assessing the importance of a breakout is the size of the volume spike. Well, volume on the October 31 breakout day was off the charts -- roughly 20x average. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +17%, +8%, +8%, and, most recently, for the quarter ended Sep 30, +25% to $38.5 million. + Dramatical jump in earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 8c vs 6c Mar 07 vs Mar 06: 10c vs 7c Jun 07 vs Jun 06: 8c vs 8c Sep 07 vs Sep 06: 15c vs 6c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends June 30) is 63c, revised upward from 50c 90 days ago (and up from FY 07 actual earnings of 32c); and the consensus estimate for FY 09 is 80c, revised upward from 69c 90 days ago. + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 22%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least a penny above estimates in each of the past three quarters. Most recently, for the quarter ended Sep 30, earnings came in 4c above the consensus. + 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 ("Elec - Semiconductor Mfg") is ranked #56 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, December 6, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||