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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.
* Buy prices shown are net after commissions and fees. Today, Tuesday, November 25, 2008, I bought LHCG, first for client accounts, then for my personal accounts. LHC Group Inc. provides post-acute healthcare services primarily to Medicare beneficiaries in rural markets in the southern United States. They provide home-based services through home nursing agencies and hospices, and facility-based services through long-term acute care hospitals and outpatient rehabilitation clinics. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Recent breakout: Back on October 30, this stock was up sharply, breaking out of a 3-month trading range to a 19-month high. The price has been relatively steady since then, holding above the breakout pivot point, except for November 20 and 21. The stock briefly dipped just slightly below that pivot point on those two days, but immediately bounced back. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +26%, +21%, +28%, and, most recently, for the quarter ended Sep 30, +27% to $98.2 million. + Turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 37c vs 43c Dec 07 vs Dec 06: 32c vs 34c Mar 08 vs Mar 07: 35c vs 35c Jun 08 vs Jun 07: 45c vs 35c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $1.57, revised upward from $1.42 90 days ago (and up from 2007 actual earnings of $1.41); and the consensus estimate for 2009 is $1.93, revised upward from $1.70 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, 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 five quarters, including the just-reported quarter cited above. + 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 ("Medical - Outpatient / Home Care") is ranked #12 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling just slightly over recent weeks and months. -KD, Tuesday, November 25, 2008 Model Portfolio
* Buy prices shown are net after commissions and fees. 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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