|
Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since November 6, 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, Tuesday, November 11, 2008, I bought GB, first for client accounts, then for my personal accounts. Greatbatch, Inc. develops and manufactures power sources, feedthroughs, and wet tantalum capacitors used in implantable medical devices. They also provide pacemaker batteries, implantable cardiovascular defibrillator batteries, and batteries for commercial applications. Here's why I bought this stock: + My emphasis is still on cash. Even after this buy, we are still 70% in cash. However, medical stocks are acting well. + Earnings surprise: One week ago, Tuesday November 4, after the close, the company announced results for the quarter ended Sep 26. Adjusted earnings came in at 44c per diluted share (vs 29c last year and analysts' consensus 32c). Revenue was up 72% to $136.2 million (analysts' consensus $128.4 million). + A "true surprise"*: Prior to the news, the stock was trading in the lower half of its 3-month range. Then, on Nov 5, after the news came out, the stock jumped 15% on huge volume, more than seven times average. * "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). + Not Quite a Breakout: The stock has remained north of $25 ever since the close on Nov 5. A close above $26.27 would be a breakout from a 7-month range to a new 12-month high. The stock has repeatedly approached and retreated from that level since the news. I suspect it will breakout soon. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +34%, +59%, +81%, and, most recently, for the quarter ended Sep 30, +72% to $136.2 million. + Turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 31c vs 23c Mar 08 vs Mar 07: 16c vs 33c Jun 08 vs Jun 07: 30c vs 42c Sep 08 vs Sep 07: 44c vs 29c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $1.29, revised upward from $1.19 90 days ago (and up from 2007 actual earnings of $1.33); and the consensus estimate for 2009 is $1.72, revised upward from $1.64 90 days ago. + Valuation: At 15 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 6c above estimates in each of the past two quarters, including the recently reported quarter cited above, which "beat the Street" by 12c. + The company's industry group ("Medical Products") is ranked #11 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, Tuesday, November 11, 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.
The Deen's List Copyright © 2008 Deen Capital Management, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||