Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since December 21, 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 Research In Motion (RIMM)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Monday, December 24, 2007, I bought RIMM, first for client accounts, then for my personal accounts. Research In Motion designs, manufactures, and markets wireless solutions for the worldwide mobile communications market. They provide platforms and solutions for access to email, phone, SMS messaging, Internet, and Intranet-based applications. This stock is a component of the IBD 100 and the NASDAQ 100 Indexes. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Last Thursday, Dec 20, after the close, the company announced results for the quarter ended Nov 30. Earnings came in at 65c per diluted share (vs 31c last year and First Call consensus 62c). Revenue was up 100% to $1.67 billion (First Call $1.65 billion). + A "true surprise"*: Prior to the news, the stock was trading near the low end of its 3-month range. Then, on Friday, the stock soared 10.9% to $118.63 on heavy volume almost twice the daily average. The rally in RIMM shares was one of the primary catalysts in Friday's big 205-point rally (205 Dow points, that is). * "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). + Spectacular recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +66%, +76%, +108%, and, most recently, as cited above, +100%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Dec 06 vs Dec 05: 34c vs 22c Mar 07 vs Mar 06: 39c vs 22c Jun 07 vs Jun 06: 50c vs 25c Sep 07 vs Sep 06: 63c vs 31c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends Feb 29) is $2.22, revised upward from $2.00 90 days ago (and up from FY 07 actual earnings of $1.11); and the consensus estimate for FY 09 is $3.37, revised upward from $2.77 90 days ago. Just from Friday to today, the consensus as reported by First Call jumped from $2.17 to $2.22 (FY 08) and from $3.25 to $3.37 (FY 09). + Valuation: At 35 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 37%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 3c above estimates in two of the past four quarters (earnings were in line with consensus for the other two recent quarters). + 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 ("Telecom - Wireless Equipment") is ranked #43 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 24, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||