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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since September 4, 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.
* Buy prices shown are net after commissions and fees. Today, Monday, September 8, 2008, I bought IIVI, first for client accounts, then for my personal accounts. II-VI Inc. designs, manufactures, and markets optical and optoelectronic devices used in laser processing, fiber-optic telecommunication, infrared missile guidance, advanced x-ray systems, and nuclear radiation detection. This stock is a component of the IBD 100 and IBD New America Indexes. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Market timing: I am going out on a limb here in anticipation of possibly going bullish again fairly soon. + Technical: There was a heavy-volume breakout back on Aug 5 and 6 from a 4-month trading range to a new 10-year high. Since then, the stock has pulled back, but it has found support near the $40 level, which represents both the 50-day moving average and also the breakout pivot point. This could be a technical buy signal. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +15%, +24%, +25%, and, most recently, for the quarter ended June 30, +31% to $91.8 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 34c vs 26c Dec 07 vs Dec 06: 36c vs 30c Mar 08 vs Mar 07: 44c vs 33c Jun 08 vs Jun 07: 50c vs 37c + 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 $1.80, revised upward from $1.75 90 days ago (and up from FY 08 actual earnings of $1.64); and the consensus estimate for FY 10 is $2.08, revised upward from $1.95 90 days ago. + Valuation: At 20 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in each of the past three quarters. Most recently,for the quarter ended June 30, they "beat the Street" by 7c. + 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 ("Elec - Component/Connector") is ranked #92 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, Monday, September 8, 2008
* Buy prices shown are net after commissions and fees. Today, Monday, September 8, 2008, I bought PMTC, first for client accounts, then for my personal accounts. Parametric Technology Corp. develops, markets, and supports integrated product development and processes lifecycle management solutions. This stock is a component of the IBD 100 and the S&P 500 Midcap Indexes. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Market timing: I am going out on a limb here in anticipation of possibly going bullish again fairly soon. + News: According to Barron's, the company has hired Goldman Sachs to seek a buyer. + Technical: After closing at a six-week low Thursday, and basically unchanged Friday (up 10c), the stock is up sharply today on extremely heavy volume. The stock is close to breaking out of a 14-month trading range to a new six-year high. $21.77 is the pivot point for this. + Volume spike: Today's volume is about 4 times average, and is a 10-month record. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +9%, +9%, +13%, and, most recently, for the quarter ended June 30, +21% to $271.8 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 38c vs 37c Dec 07 vs Dec 06: 26c vs 23c Mar 08 vs Mar 07: 30c vs 24c Jun 08 vs Jun 07: 33c vs 16c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 08 (ends Sep 30) is $1.30, revised upward from $1.26 90 days ago (and up from FY 07 actual earnings of $1.00); and the consensus estimate for FY 09 is $1.45, revised upward from $1.42 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 10%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters. Most recently, for the quarter ended June 30, they "beat the Street" by 3c. + 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 Software - Design") is ranked #80 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, Monday, September 8, 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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