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 Progress Software (PRGS)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Friday, December 21, 2007, I bought PRGS, first for client accounts, then for my personal accounts. Progress Software Corp. develops, markets, and distributes application development, deployment, and integration software to business, industry, and government worldwide. Their products include databases, application servers, messaging servers, and development tools for Internet/Web, extranet, and intranet applications. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + My indicators are improving, heading toward neutral territory. It is possible, just possible, that the market has launched a sustainable rally. It is also possible that this is a sucker's rally. I'm still very suspicious, and we're still mostly cash, but the odds are improving. + News: Yesterday, Dec 20, before the open, the company announced results for the quarter ended Nov 30. Non-GAAP earnings came in at 54c per diluted share (vs 35c last year and First Call consensus 52c). Revenue was up 12% to $136.8 million (First Call $128.9 million). + A "true surprise"*: For more than a week prior to the news, the stock was trending lower. Then, yesterday, the stock jumped 5.5% on about 2.5 times average 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: This morning, the stock is up again, and now breaking out of a 27-month trading range to a 10-year (at least) high. Volume as I write this, about two hours into the trading day, is already about two times the daily average. + Accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +11%, +9%, +9%, and, most recently, as cited above, +12%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 37c vs 30c Mar 07 vs Mar 06: 41c vs 34c Jun 07 vs Jun 06: 44c vs 37c Sep 07 vs Sep 06: 54c vs 35c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends Nov 30) is $1.91, revised upward from $1.90 90 days ago (and up from FY 07 actual earnings of $1.76). There is no estimate data for next year (FY 09) available yet. + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is attractively priced. + The company's industry group ("Computer Software - Enterprise") is ranked #8 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been fairly stable at that ranking level over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, December 21, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||