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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since September 26, 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, Monday, September 28, 2009, I bought EBIX, first for client accounts, then for my personal accounts. Ebix, Inc., together with its subsidiaries, provides software and e-commerce solutions for the insurance industry primarily in North America, Australia, New Zealand, India, and Singapore. It was formerly known as Delphi Systems, Inc. and changed its name to Ebix, Inc. in December 2003. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + I turned bearish on Friday, but we're having a huge rally, and my stock picks are among the leaders. Accounts are outperforming the S&P today, on the strength of that leadership, even though we're mostly in cash. That's remarkable. I may well return to a bullish stance shortly. + News: This morning, the company announced that it expects the premiums processed on its AnnuityNet Platform to be $60 billion in 2010, up from the $36 billion number last reported by Ebix. + A "true surprise"*: The long-term trend is clearly up, but, for two weeks prior to the news, the stock price has been on a downward slope. Then, today, the stock is soaring on very heavy volume. * "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term run-up in the stock price (i.e. not preceded by rumor). + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +71%, +65%, +24%, and, most recently, for the quarter ended June 30, +26% to $22.4 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: 62c vs 33c Dec 08 vs Dec 07: 66c vs 40c Mar 09 vs Mar 08: 69c vs 47c Jun 09 vs Jun 08: 73c vs 54c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $2.91, revised upward from $2.61 60 days ago (and up from 2008 actual earnings of $2.28); and the consensus estimate for 2010 is $3.46, revised upward from $3.16 60 days ago. (90-days-ago data not available) + Valuation: At 15 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock is still, even after today's big gain, very attractively priced. + For the quarter ended June 30, their earnings "beat the Street" by 13c. I do not have earnings surprise data for prior quarters. + The company's industry group ("Computer Software - Enterprise") is ranked #42 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, Monday, September 28, 2009 Bought Lincoln Educational (LINC)
* Buy prices shown are net after commissions and fees. Today, Monday, September 28, 2009, I bought LINC, first for client accounts, then for my personal accounts. Lincoln Educational Services Corporation provides career-oriented post-secondary education services in the United States. It offers degree and diploma programs for high school graduates and working adults. This stock is a component of the IBD 100 and the IBD New America Indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + I turned bearish on Friday, but we're having a huge rally, and my stock picks are among the leaders. Accounts are outperforming the S&P today, on the strength of that leadership, even though we're mostly in cash. That's remarkable. I may well return to a bullish stance shortly. + Technical: The stock is very close to breaking out of a seven-week range to a new all-time high. Friday, the stock was up sharply on very heavy volume (not quite a breakout). + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +16%, +19%, +41%, and, most recently, for the quarter ended June 30, +51% to $128.1 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: 22c vs 18c Dec 08 vs Dec 07: 51c vs 37c Mar 09 vs Mar 08: 22c vs 2c Jun 09 vs Jun 08: 27c vs 5c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $1.46, revised upward from $1.29 90 days ago (and up from 2008 actual earnings of 79c); and the consensus estimate for 2010 is $1.81, revised upward from $1.56 90 days ago. + Valuation: At 12.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock is still, even after Friday's big gain, very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past seven quarters. Most recently, for the quarter ended June 30, they "beat the Street" by 8c. + 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 - Schools") is ranked #192 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, Monday, September 28, 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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