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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since July 17, 2008) Contents
Performance
* An average of managed accounts, net after all commissions and fees. Click here for more performance data. Click here for information on managed accounts. Bought Estee Lauder Cos Inc. (EL)
* Buy prices shown are net after commissions and fees. Today, Monday, August 18, 2008, I bought EL, first for client accounts, then for my personal accounts. The Estee Lauder Companies Inc. manufactures and markets skin care, makeup, fragrance, and hair care products. Their products are sold in countries and territories around the world under brand names such as Estee Lauder, Aramis, Clinique, Prescriptives, Origins, and Aveda. This stock is a component of the S&P 500 Index. Here's why I bought this stock: + Earnings surprise: Last Thursday, after the close, the company announced results for the quarter ended June 30. Earnings came in at 61c per diluted share (vs 45c last year and analysts' consensus 56c). Revenue was up 14% to $2.01 billion (analysts' consensus $1.88 billion). + A "true surprise"*: For five days prior to the news, the stock was edging mostly lower. Then, on Thursday, the stock soared 14% on huge 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: Last Thursday's price jump was a breakout from a 3-month trading range to a new 15-month high. + Volume spike: Last Thursday's volume was enormous -- 7 times average, and almost twice the previous 12-month record. This volume spike factor is a key reason I like this stock. + Last Thursday, the stock met the stringent technical buy criteria outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +7%, +16%, +11%, and, most recently, as cited above, +14%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: $0.20 vs $0.27 Dec 07 vs Dec 06: $1.14 vs $0.99 Mar 08 vs Mar 07: $0.46 vs $0.45 Jun 08 vs Jun 07: $0.61 vs $0.45 + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 09 (ends June 30) is $2.67, revised upward from $2.66 90 days ago (and up from FY 08 actual earnings of $2.40); and the consensus estimate for FY 10 is $2.99, revised upward from $2.97 90 days ago. + Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 11%, the stock is moderately priced. + The company's industry group ("Cosmetics / Personal Care") is ranked #57 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, Monday, August 18, 2008 Model Portfolio
* Buy prices shown are net after commissions and fees. ** 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.
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