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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since September 24, 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, October 31, 2008, I bought THOR, first for client accounts, then for my personal accounts. Thoratec Corp. researches, develops, manufactures, and markets medical devices for circulatory support and vascular graft applications. The Company's products include a ventricular assist device, an implantable left ventricular heart assist device, a vascular access graft, and a coronary artery bypass graft. Thoratec also supplies whole-blood coagulation testing equipment. This stock is a component of the IBD 100 and the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Major earnings surprise: Yesterday, after the close, the company announced results for the quarter ended Sep 27. Non-GAAP earnings came in at 17c per diluted share (vs 4c last year and analysts' consensus 10c). Revenue was up 44% to $80.8 million (analysts' consensus $69.4 million). + A "true surprise"*: Prior to the news, the stock was trading near the low end of its recent range. Then, today, it is soaring 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: As I write this, about 50 minutes before the close, volume is already 3x the daily average. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +9%, +12%, +44%, and, most recently, for the quarter ended Sep 27, +44% to $80.8 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 11c vs 13c Mar 08 vs Mar 07: 8c vs 8c Jun 08 vs Jun 07: 20c vs 9c Sep 08 vs Sep 07: 17c vs 4c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is 52c, revised upward from 46c 90 days ago (and up from 2007 actual earnings of 33c); and the consensus estimate for 2009 is 64c, revised upward from 62c 90 days ago. + Valuation: At 39 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 28%, the stock is maybe not cheap, but certainly priced within reason. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 7c. + The company's industry group ("Medical Products") is ranked #14 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, October 31, 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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