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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 American Science & Eng'g (ASEI)
* Buy prices shown are net after commissions and fees. Today, Wednesday, December 24, 2008, I bought ASEI, first for client accounts, then for my personal accounts. American Science and Engineering, Inc. provides X-ray detection and imaging products used for the detection of illegal drugs, terrorist explosives, and smuggled goods. This stock is a component of the IBD 100 and the IBD New America Indexes. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Technical: Since a heavy-volume breakout to a new 1-year high on November 11, the stock has been generally acting well. Just over the past 3 trading days, however, the price has been slipping on receding volume. Early this morning, the slide continued, with a brief test of the 50-day moving average. The stock has turned around now just within the last couple of hours. I suspect this represents an end-of-dip moment -- an excellent buying opportunity if I'm right. + Turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -11%, -8%, -11%, and, most recently, as cited above, +50%. + Turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 55c vs 86c Mar 08 vs Mar 07: 30c vs 60c Jun 08 vs Jun 07: 30c vs 66c Sep 08 vs Sep 07: 83c vs 48c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 09 is $3.10, revised upward from $2.89 90 days ago (and up from FY 08 actual earnings of $1.99); and the consensus estimate for FY 10 is $3.55, revised upward from $3.27 90 days ago. + Valuation: At 19.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + For the most recently reported quarter, ended Sep 30, earnings came in 13c above the Street consensus. + 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 ("Commercial Services - Security / Safety") is ranked #13 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, Wednesday, December 24, 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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