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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since October 9, 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 Diedrich Coffee Inc. (DDRX)
* Buy prices shown are net after commissions and fees. Today, Monday, October 19, 2009, I bought DDRX, first for client accounts, then for my personal accounts. Diedrich Coffee, Inc., together with its subsidiaries, engages in the wholesale and roasting of coffee in the U.S. They sell their products under brand names Diedrich Coffee, Gloria Jean's, Coffee People, Black Tiger, Morning Edition Blend, Wiener Melange Blend, Nepenthe Blend, and Flor de Apanas. Here's why I bought this stock: + Breakout: This morning the stock is breaking out of an 11-week trading range to a new all-time high on huge volume. + Volume spike: As I'm writing this, about two-and-a-half hours after the opening bell, volume has already exceeded 6 times the daily average and is very close to a 52-week record. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +55%, +55%, +55%, and, most recently, for the quarter ended June 30, +57% to $20.1 million. + Recent emergence into profitability. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: (30c) vs (19c) Dec 08 vs Dec 07: (19c) vs (19c) Mar 09 vs Mar 08: 24c vs (19c) Jun 09 vs Jun 08: 29c vs (37c) Earnings estimate revision history and earnings surprise data appear to be unavailable for this little-known stock. + Strong estimates: I do see a current estimate for FY 10 (ends June 30) of $1.00, and for FY 11 of $1.75. + Valuation: At 28 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 30%, the stock is still, even after today's big gain, attractively priced. + The company's industry group ("Retail/Wholesale - Food") is ranked #30 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, October 19, 2009 Sold S&P Depositary Receipt (SPY) +3.5%
* Buy and sell prices shown are net after commissions and fees. This means that the gain/loss shown is also net after transaction expenses. Today, Monday, October 19, 2009, I sold SPY, first for client accounts, then for my personal accounts. I am selling just enough SPY to fund the purchase of DDRX. We remain fully invested. -KD, Monday, October 19, 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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