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 Cal-Maine Foods Inc. (CALM)
* 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 28, 2007, I bought CALM, first for client accounts, then for my personal accounts. Cal-Maine Foods, Inc. produces, cleans, grades, packs, and sells fresh shell eggs. They market their products in various states in the Southwestern, Southeastern, Midwestern, and Mid-Atlantic regions of the United States. This stock is a component of the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended Dec 1. Earnings came in at $1.69 per diluted share (vs 27c last year). Revenue was up 62% to $223.7 million. Note: No estimates are available on this stock. + A "true surprise"*: For three weeks prior to the news, the stock was trading in a sideways pattern. Then, this morning, the stock is soaring on extremely heavy 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). + Possible Breakout: Earlier this morning, the stock broke out of a 12-week trading range to a new all-time high. As I write this, the price has slipped below the all-time closing high of $28.50 set on Oct 8, but, earlier today, it traded as high as $31.45. At the time I decided to buy, about two-and-a-half hours before the close, volume was already more than 7x the daily average. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +35%, +31%, +55%, and, most recently, for the quarter ended Nov 30, +62% to $223.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: Feb 07 vs Feb 06: $0.74 vs $0.34 May 07 vs May 06: $0.77 vs ($0.01) Aug 07 vs Aug 06: $0.76 vs ($0.23) Nov 07 vs Nov 06: $1.69 vs $0.27 + Valuation: At 7 times trailing 12-month earnings, the stock is very attractively priced. + 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 ("Food - Meat Products") is ranked #110 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 28, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||