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 Martek Bioscience (MATK)
* 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 26, 2007, I bought MATK, first for client accounts, then for my personal accounts. Martek Biosciences Corp. develops, manufactures, and sells products derived from micro-algae. Their products include nutritional oils for infant formula, nutritional supplements and food ingredients, reagents to visualize molecular interactions for drug discovery and development, and fluorescent markers for diagnostics, miniaturized screening, and gene detection. Here's why I bought this stock: + Poised to break out: Unlike my usual practice, this time I am buying in anticipation of a breakout. A close above $30.55 would be a breakout from an 8-week trading range to a 15-month high. I think this is likely to happen soon. Back on Dec 13, the stock shot up 20% to $29.15 on more than huge volume, more than 8x average. That move as fueled by an earnings surprise. There is significant resistance at the $30 level, but, again, I think a breakout is likely. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +12%, +9%, +11%, and, most recently, for the quarter ended Oct 30, +22% to $82.0 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Jan 07 vs Jan 06: 10c vs 15c Apr 07 vs Apr 06: 15c vs 17c Jul 07 vs Jul 06: 19c vs 14c Oct 07 vs Oct 06: 23c vs 10c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends Oct 30) is 93c, revised upward from 84c 90 days ago (and up from FY 07 actual earnings of 66c); and the consensus estimate for FY 09 is $1.10 (unchanged since Dec 14, when this estimate was first published by First Call). + Valuation: At 27 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 24%, the stock is attractively priced. + History of earnings surprises: Earnings for the quarter ended Jul 31 came in 1c ahead of consensus, and earnings for the quarter ended Oct 30 came in 3c ahead. The latter surprise sparked the big move on Dec 13 cited above. + The company's industry group ("Medical - Biomed / Biotech") 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 rising over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, December 26, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||