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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 Super Micro Computer, Inc. (SMCI)
* Buy prices shown are net after commissions and fees. Today, Wednesday, September 3, 2008, I bought SMCI, first for client accounts, then for my personal accounts. Super Micro Computer, Inc. makes application-optimized server systems, server boards, chassis, and power supplies to distributors and OEMS. Here's why I bought this stock: + Recent breakout: On August 20, the stock broke out of a six-and-a-half month trading range. After a little profit-taking over the past week, the stock is today resuming its upward march. It is now trading at a 14-month high, and is less than a dollar away from a new all-time high. (The current all-time closing high is $11.43, set on June 5, 2007.) + Volume spike: Today, a big up day, volume is more than 4 times 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: +31%, +21%, +29%, and, most recently, for the quarter ended June 30, +34% to $148.9 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 17c vs 16c Dec 07 vs Dec 06: 22c vs 16c Mar 08 vs Mar 07: 15c vs 14c Jun 08 vs Jun 07: 21c vs 16c + 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 85c, revised upward from 84c 90 days ago (and up from FY 08 actual earnings of 75c); and the consensus estimate for FY 10 is $1.11, revised upward from $1.06 30 days ago (the 90-days-ago number for FY 10 is not available). + Valuation: At 10 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 23%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in two of the past three 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 ("Computer Manufacturers") is ranked #47 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, Wednesday, September 3, 2008 Sold SunPower Corp. (SPWR) -4.3%
* Buy and sell prices shown are net after commissions and fees. This means that the gain/loss shown is also net after transaction expenses. Today, Wednesday, September 3, 2008, I sold SPWR, first for client accounts, then for my personal accounts. The stock is poised to close below my stop-loss price, which I had set at $87.20. Reason enough to sell. -KD, Wednesday, September 3, 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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