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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 Solera Holdings Inc. (SLH)
* Buy prices shown are net after commissions and fees. Today, Thursday, August 28, 2008, I bought SLH, first for client accounts, then for my personal accounts. Solera Holdings Inc provides software and services to the automobile insurance claims processing industry, collision repair facilities, independent assessors, and automotive recyclers. Here's why I bought this stock: + Earnings surprise: Yesterday, Aug 27, after the close, the company announced results for the quarter ended Jun 30. Earnings came in at 34c per diluted share (vs 22c last year and analysts' consensus 29c). Revenue was up 19% to $145.5 million (analysts' consensus $137.0 million). + A "true surprise"*: For nine days prior to the news, the stock price has been heading mostly lower. It closed yesterday at a three-and-a-half week low. Then, this morning, the stock is soaring on very 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). + Near breakout: If we could ignore one light-volume day in August (Aug 14) when the stock closed at $30.52, then we could say a close above $29.97 will be a breakout from a six-week trading range to a new all-time high. + Volume spike: As I write this, almost exactly half-way through the regular trading session, volume is more than twice 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: +11%, +14%, +13%, and, most recently, as cited above, +19%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 26c vs 9c Dec 07 vs Dec 06: 29c vs 10c Mar 08 vs Mar 07: 32c vs 14c Jun 08 vs Jun 07: 34c vs 22c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $1.37, revised upward from $1.36 90 days ago (and up from 2008 actual earnings of $1.22); and the consensus estimate for 2010 is $1.59, revised upward from $1.11 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings-per-share at least 5c above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 5c. + The company's industry group ("Computer Software - Enterprise") is ranked #35 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, but it has been holding relatively steady over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, Thursday, August 28, 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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