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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 Fuel Systems Solutions Inc. (FSYS)
* Buy prices shown are net after commissions and fees. Today, Thursday, December 18, 2008, I bought FSYS, first for client accounts, then for my personal accounts. Fuel Systems Solutions Inc. provides advanced alternative fuel systems technology and components for internal combustion engines. Their products enable these engines to function using environmentally friendly gaseous fuels such as propane, natural gas, and biogas. This stock is a component of the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Market timing: There's a good chance I'll be turning bullish later today. + Technical: I view the recent chart pattern as bullish. For the past three weeks, the stock has been holding just above its rising 200-day moving average. Also, since the end of September, the heaviest volume has been on the buy side. + The stock is weak this morning on light volume, after a fairly big heavy volume up day yesterday. I view this weakness as 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: +53%, +73%, +50%, and, most recently, for the quarter ended September 30, +62% to $105.5 million. + Explosive recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 31c vs (8c) Mar 08 vs Mar 07: 40c vs 7c Jun 08 vs Jun 07: 54c vs 3c Sep 08 vs Sep 07: 73c vs 16c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $2.09, revised upward from $1.45 90 days ago (and up from 2007 actual earnings of 56c); and the consensus estimate for 2009 is $2.05, revised upward from $1.82 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 14c above estimates in each of the past four quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by a whopping 47c. + 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 ("Machinery - Gen Industrial") is ranked #143 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, Thursday, December 18, 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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