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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, Wednesday, November 26, 2008, I bought WBSN, first for client accounts, then for my personal accounts. Websense, Inc. provides solutions which enable businesses to monitor, report, and manage how their employees use the Internet. This stock is a component of the IBD New America and the S&P 600 SmallCap Indexes. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Technical: The stock has fallen from a recent peak of $23.99 on September 25 to a recent nadir of $14.04 on November 20, and yet most of the heavy volume is on the buy side. The 200-day moving average had been rising up until a couple of weeks ago, but now it is falling slightly. The stock is just now breaking a steep 3-week downtrend line. I view the stock as poised for a rebound. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +29%, +35%, +45%, and, most recently, for the quarter ended Sep 30, +52% to $76.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 28c vs 25c Mar 08 vs Mar 07: 35c vs 21c Jun 08 vs Jun 07: 37c vs 22c Sep 08 vs Sep 07: 34c vs 24c + Solid earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $1.35, revised upward from $1.34 90 days ago (and up from 2007 actual earnings of 95c); and the consensus estimate for 2009 is $1.43, revised downward from $1.44 90 days ago. + Valuation: At 11 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is very 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. Most recently, for the quarter ended Sep 30, the company "beat the Street" by 2c. + The company's industry group ("Internet Software") is ranked #75 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. I chose to buy the stock in spite of the following negative factor: - As mentioned above, the 2009 earnings estimate of $1.43 has been revised down a penny versus where it was 90 days ago. -KD, Wednesday, November 26, 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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