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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since December 13, 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 S X C Health Solutions (SXCI)
* Buy prices shown are net after commissions and fees. Today, Tuesday, December 16, 2008, I bought SXCI, first for client accounts, then for my personal accounts. SXC Health Solutions Corp. provides pharmacy benefits management (PBM) services and healthcare IT solutions to the healthcare benefits management industry. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Recent Breakout: Last Thursday, Dec 11, this stock was up $1.17, or 7.1%, to $17.64 on heavy volume. This was a breakout from a 7-month range to a new 14-month high. Friday, yesterday, and earlier today, the stock was mostly lower, but this afternoon it is up again sharply on even heavier volume. Thanks to earlier weakness, we are still buying at a price lower than Thursday's close. I think this stock is now ready to follow through on that breakout and move higher. + Two quarters of excellent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +7%, +0%, +886%, and, most recently, for the quarter ended Sep 30, more than +1,000% to $318.1 million. + Two quarters of excellent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 18c vs 15c Mar 08 vs Mar 07: 16c vs 17c Jun 08 vs Jun 07: 21c vs 14c Sep 08 vs Sep 07: 24c vs 17c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is 57c, revised upward from 48c 90 days ago (but down from 2007 actual earnings of 66c); and the consensus estimate for 2009 is 75c, revised upward from 70c 90 days ago. + Valuation: At 23 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 22%, 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 four quarters, including the just-reported quarter cited above. + The company's industry group ("Computer Software - Medical") 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, December 16, 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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