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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since October 23, 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 Priceline.com Inc. (PCLN)
* Buy prices shown are net after commissions and fees. Today, Tuesday, November 10, 2009, I bought PCLN, first for both client and personal accounts. Priceline.com Inc. operates as an online travel company principally in the United States, Europe, and Asia. They provide various travel services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises, and reservation services. In the U.S., they offer customers the option of using their Name Your Own Price service. This stock is a component of the NASDAQ 100, the IBD 100, and the IBD New America Indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: Yesterday, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at $3.45 per diluted share (vs $2.39 last year and analysts' consensus $2.92). Revenue was up 30% to $730.7 million (analysts' consensus $694.0 million). + Market reaction: The stock is up sharply today, hitting a 9-year high today on extremely heavy volume. As I write this, less than two hours after the open, volume is already 5 times the daily average. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +21%, +15%, +17%, and, most recently, as cited above, +30%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 08 vs Dec 07: $1.29 vs $0.96 Mar 09 vs Mar 08: $1.09 vs $0.76 Jun 09 vs Jun 08: $2.02 vs $1.55 Sep 09 vs Sep 08: $3.45 vs $2.39 + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $7.53, revised upward from $6.67 90 days ago (and up from 2008 actual earnings of $5.96); and the consensus estimate for 2010 is $9.18, revised upward from $7.49 90 days ago. + Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is still, even after this morning's big gain, attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 12c above estimates in each of the past ten quarters, including the just-reported quarter cited above, which "beat the Street" by 53c. + 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: - Not a "true surprise"*: For six trading sessions prior to the news, the stock was edging higher. That means it is not a "true surprise"*, strictly speaking. * "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). - The company's industry group ("Leisure - Services") is ranked #15 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, Tuesday, November 10, 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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