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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since September 10, 2009) 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, Friday, September 25, 2009, I bought HEAT, first for client accounts, then for my personal accounts. SmartHeat, Inc. manufactures sells plate heat exchangers (PHEs) and packages, thermometer testing devices, and heat usage calculators in the People's Republic of China. Here's why I bought this stock: + Recent breakout: Back on Sept 18, the stock jumped 19% to $11.94 on huge volume. This was a breakout from a 5-week range to a new all-time high. The stock pulled back a little yesterday and the day before, allowing us to buy today below that price. The stock is up so far today, and I think the stock's strong uptrend is likely to resume. It's been hard to find an entry point for this stock. It's been up 17 of the past 19 trading sessions -- not counting today. + Average trading volume has increased substantially since August -- mostly on the buy side. + Mostly excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +586%, -57%, +102%, and, most recently, for the quarter ended June 30, +125% to $12.5 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: 18c vs 1c Dec 08 vs Dec 07: 4c vs 9c Mar 09 vs Mar 08: 5c vs 3c Jun 09 vs Jun 08: 11c vs 3c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is 62c, revised upward from 56c 90 days ago (and up from 2008 actual earnings of 29c); and the consensus estimate for 2010 is 87c, revised upward from 62c 90 days ago. + Valuation: At 13 times next year's estimated earning, the stock is very attractively priced. (Estimated 5-year earnings growth rate not available.) + History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past three quarters. Most recently, for the quarter ended June 30, they "beat the Street" by 6c. + 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 ("Pollution Control - Equipment") is ranked #155 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling slightly over recent weeks and months. -KD, Friday, September 25, 2009 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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