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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, Friday, September 12, 2008, I bought CSX, first for client accounts, then for my personal accounts. CSX Corp. is an international freight transportation company. They provide rail, inter-modal, domestic container-shipping, barging, and contract logistics services around the world. CSX's rail transportation services are provided principally in the eastern United States. This stock is a component of the S&P 500 and the Dow Jones Transportation Average. Here's why I bought this stock: + News: Yesterday morning, the company raised 2008 and long-term financial guidance. The company now expects to earn $3.65 to $3.75 per share for FY 08. + A "true surprise"*: Prior to the news, the stock was very new a 5-month low. Then, yesterday, the stock was up 10.7% on 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). + Volume spike: Yesterday's volume was more than twice average, and was a 5-month record. + Accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +3%, +8%, +12%, and, most recently, for the quarter ended June 30, +15% to $2.91 billion. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 67c vs 54c Dec 07 vs Dec 06: 85c vs 57c Mar 08 vs Mar 07: 80c vs 50c Jun 08 vs Jun 07: 89c vs 71c + Strong earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $3.57, revised downward from $3.59 90 days ago (and up from 2007 actual earnings of $2.70); and the consensus estimate for 2009 is $4.28, revised upward from $4.23 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 5c above estimates in each of the past five quarters. Most recently, for the quarter ended June 30, earnings were in line. + The company's industry group ("Transportation - Rail") is ranked #28 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, Friday, September 12, 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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