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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. Bought Tongxin International (TXIC)
* Buy prices shown are net after commissions and fees. Today, Thursday, October 8, 2009, I bought TXIC, first for client accounts, then for my personal accounts. Tongxin International Ltd., through its subsidiary, Hunan Tongxin Enterprise Co Ltd., designs, develops, manufactures, sells, and services engineered vehicle body structures (EVBS) for light, medium, and heavy duty trucks, and light vehicles in the People's Republic of China. Its EVBS consist of exterior body panels, including doors, floor pans, hoods, side panels, and fenders. The company also designs, fabricates, and tests dies used in the vehicle body structure manufacturing process. In addition, it manufactures complete cab structures for commercial vehicles. Tongxin International exports its products to Vietnam and the Middle East. Here's why I bought this stock: + Market timing: Evidence seems to be mounting that I've been erring on the side of caution. We've been gaining, but underperforming, this week, due to our high level of cash. Here's one more small step in the direction of taking more risk. + News: There is news this morning that the company has secured a second on-site manufacturing contract with a leading commercial vehicle manufacturer. + Breakout: Today, the stock is breaking out of an 8-week trading range to a new all-time high. + Volume spike: Today's breakout volume is more than 5x the daily average as I write this, a few minutes before the close. + Technical: Average trading volume on this little-known stock has been rising sharply since April. Most of the volume has been on the buy side. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: $0.19 vs $0.22 Dec 08 vs Dec 07: $1.09 vs $0.14 Mar 09 vs Mar 08: $0.36 vs $0.27 Jun 09 vs Jun 08: $0.34 vs $0.19 Earnings estimates and earnings surprise data are not available for this little-known stock. + Valuation: At 6 times trailing 12-month earnings, the stock is very attractively priced. + The company's industry group ("Auto/Truck - Original Equipment") is ranked #6 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally fairly stable over recent weeks and months. + 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 questionable factor: - Spotty recent sales growth (though the most recent quarter is very good). Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +5%, -18%, -3%, and, most recently, for the quarter ended June 30, +50% to $34.9 million. -KD, Thursday, October 8, 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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