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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.
* Buy prices shown are net after commissions and fees. Today, Tuesday, December 30, 2008, I bought EZPW, first for client accounts, then for my personal accounts. EZCORP, Inc. owns and operates pawn shops in the U.S. These shops retail previously-owned merchandise and serve as sources for consumer credit. This stock is a component of the IBD New America Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Pawn shops do particularly well during a recession, as people facing hard times seek to turn their valuables into cash. + Technical: The stock is in a long-term uptrend (rising 200-day moving average), but has been down each of the past 7 trading sessions. It's up today modestly on heavy volume. I am viewing the drop in price as a buying opportunity. Today's volume is on track to set a 3-month record -- heavier volume than any of those 7 down days.. It is right at the rising 200-day moving average that the stock has found support. The close on Dec 17, prior to this losing streak, was $17.56. I think the stock can easily get back to that level, or close to it. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +22%, +27%, +24%, and, most recently, for the quarter ended Sep 30, +19% to $123.4 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 07 vs Dec 06: 29c vs 23c Mar 08 vs Mar 07: 30c vs 23c Jun 08 vs Jun 07: 25c vs 16c Sep 08 vs Sep 07: 34c vs 26c - Strong earnings-per-share estimates for FY 10: According to recent data from First Call, the consensus earnings estimate for FY 09 (ends Sep 30) is $1.49, revised upward from $1.41 90 days ago (and up from FY 08 actual earnings of $1.18); and the consensus estimate for FY 10 is $1.71, revised downward from $1.76 90 days ago. + Valuation: At 9 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 19%, this stock is very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in three of the past four quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 3c. + 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: - As cited above, the FY 10 estimate has come down by a nickel over the past 90 days. - The company's industry group ("Financial Services - Misc") is ranked #90 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, Tuesday, December 30, 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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