Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since December 14, 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 B/E Aerospace Inc. (BEAV)
* 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 19, 2007, I bought BEAV, first for client accounts, then for my personal accounts. BE Aerospace, Inc. manufactures interior products for commercial and general aviation aircraft cabins. The Company serves major airlines and various general aviation customers and airframe manufacturers. Products include a variety of aircraft seating products, food and beverage preparation and storage equipment, cabin interior structures, and oxygen delivery systems. Here's why I bought this stock: + I am still bearish on the market. My emphasis remains sitting on cash. This buy, combined with a sell earlier today, keeps our risk profile roughly unchanged versus yesterday -- which is to say we're still very high on cash, very low on risk. + Recent Breakout: Last Thursday, December 13, the stock broke out of a 5-week trading range to a new 10-year high on extremely heavy volume, more than 10x average. I am impressed by that volume spike factor. I consider that a very bullish indication. + Other technical considerations: The stock has been generally rising in a smooth uptrend since November 21, showing impressive relative strength in a generally weak market. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +44%, +57%, +47%, and, most recently, for the quarter ended Sep 30, +49% to $428.2 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 28c vs 16c Mar 07 vs Mar 06: 36c vs 20c Jun 07 vs Jun 06: 39c vs 24c Sep 07 vs Sep 06: 48c vs 27c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2007 is $1.64, revised upward from $1.56 90 days ago (and up from 2006 actual earnings of 98c); and the consensus estimate for 2008 is $2.33, revised upward from $2.30 90 days ago. + Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 27%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 2c above estimates in three of the past four quarters. Most recently, for the quarter ended Sep 30, earnings came in 7c above consensus. + The company's industry group ("Aerospace/Defense Equipment") is ranked #26 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally fairly stable over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, December 19, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||