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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. Bought Cubist Pharmaceuticals (CBST)
* Buy prices shown are net after commissions and fees. Today, Thursday, November 13, 2008, I bought CBST, first for client accounts, then for my personal accounts. Cubist Pharmaceuticals, Inc. is a drug company that discovers, develops, and commercializes novel drugs to treat infections. The Company's lead product is a unique agent with bactericidal activity that addresses the critical need for new antibiotics with potent activity against life threatening infections. Here's why I bought this stock: + The market is giving a technical buy signal today (though my indicators remain overall bearish). + Recent breakout: Back on October 31, the stock broke out of an 11-week trading range to a new six-year high on heavy volume. + I think the stock is a buy today in particular because we are able to buy within the October 31 price range, the stock price has held above that breakout pivot point (on a closing basis), and today the stock sold off sharply, touched its 50-day moving average, and the rebounded even more sharply on very heavy volume. I view this as a technical buy signal. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +52%, +48%, +46%, and, most recently, for the quarter ended Sep 30, +41% to $112.4 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 41c vs 14c Mar 08 vs Mar 07: 33c vs 14c Jun 08 vs Jun 07: 35c vs 28c Sep 08 vs Sep 07: 48c vs 36c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $1.26, revised upward from $1.06 90 days ago (and up from 2007 actual earnings of $1.20); and the consensus estimate for 2009 is $1.74, revised upward from $1.66 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 28%, the stock is very attractively priced. + Recent earnings surprise: Earnings for the most recent quarter, ended Sep 30, "beat the Street" by 11c. + The company's industry group ("Medical - Biomed/Biotech") is ranked #7 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, Thursday, November 13, 2008 Bought S&P Depositary Receipt (SPY)
* Buy prices shown are net after commissions and fees. Today, Thursday, November 13, 2008, I bought SPY, first for client accounts, then for my personal accounts. This is a proxy for the S&P 500. The market is giving a technical buy signal today -- a high-volume rally off of a double-bottom. So far, my indicators are not confirming this. If my indicators remain overall bearish, I may return to cash in a very few days. But, even in that case, we should have a good chance of turning a profit. I think the market is poised to rally at least through tomorrow and perhaps through early next week. And substantial percentage gains are easily achieved off of current extremely depressed levels, even in such a short time frame. -KD, Thursday, November 13, 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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