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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since December 8, 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 Epiq Systems Inc. (EPIQ)
* Buy prices shown are net after commissions and fees. Today, Monday, December 8, 2008, I bought EPIQ, first for client accounts, then for my personal accounts. EPIQ Systems, Inc. develops, markets, licenses, and supports proprietary software products for bankruptcy trustees on a national basis. They also develop communications systems for business-to-business and enterprise- wide open file delivery. This stock is a component of the S&P 600 SmallCap Index. Here's why I bought this stock: + This company stands to benefit from a recession, as they sell products used by bankruptcy trustees. + Breakout: Last Friday, Dec 5, this stock broke out of a 12-month trading range to a new 12-month high on heavy volume, almost 3x average. + Today, the stock is down a bit on lighter volume. I consider this weakness a buying opportunity. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -5%, +19%, +47%, and, most recently, for the quarter ended Sep 30, +31% to $58.9 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 14c vs 10c Mar 08 vs Mar 07: 14c vs 11c Jun 08 vs Jun 07: 15c vs 12c Sep 08 vs Sep 07: 15c vs 13c + Valuation: At 23.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 16.5%, the stock is moderately priced. + The company's industry group ("Computer Software - Financial") is ranked #54 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising strongly 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 factors: - Strong but slightly falling earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is 60c, unchanged from 90 days ago (and up from 2007 actual earnings of 50c); and the consensus estimate for 2009 is 72c, revised downward from 74c 90 days ago. - Earning surprise history: Earnings have come in a penny shy of estimates in 2 of the past 3 quarters, including the most recent quarter ended Sep 30. -KD, Monday, December 8, 2008 Bought S&P Depositary Receipt (SPY)
* Buy prices shown are net after commissions and fees. Today, Monday, December 8, 2008, I bought SPY, first for client accounts, then for my personal accounts. This is a quick means to gain exposure to the market, in honor of my turning bullish today. We still have about 37% cash, which I expect to put to work later this week. -KD, Monday, December 8, 2008
* Buy and sell prices shown are net after commissions and fees. This means that the gain/loss shown is also net after transaction expenses. Today, Monday, December 8, 2008, I sold DV, first for client accounts, then for my personal accounts. I am selling DV, which is down sharply today, because of a probable sell signal from my proprietary StockSell program at today's close. -KD, Monday, December 8, 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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