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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since November 16, 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 RINO International Corp. (RINO)
* Buy prices shown are net after commissions and fees. Today, Monday, November 16, 2009, I bought RINO, for both client and my personal accounts. Rino International Corporation designs, manufactures, installs, and services wastewater treatment and flue gas desulphurization equipment used in the iron and steel industry in China. Here's why I bought this stock: + News: On Friday, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 68c per diluted share (vs 39c last year and analysts' consensus 47c). Revenue was up 41% to $63.3 million (analysts' consensus $44.2 million). + Breakout: The stock jumped 13.6% on extremely heavy volume. This was a breakout from a five-week trading range to a new 10-year high. + Volume spike: Friday's volume was more than four times average, and was a 12-month record. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +136%, +87%, +18%, and, most recently, as cited above, +41%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 08 vs Sep 07: 39c vs 24c Dec 08 vs Dec 07: 4c vs (12c) Mar 09 vs Mar 08: 50c vs 20c Jun 09 vs Jun 08: 39c vs 21c
Dec 08 vs Dec 07: 4c vs (12c) Mar 09 vs Mar 08: 50c vs 20c Jun 09 vs Jun 08: 32c vs 21c Sep 09 vs Sep 08: 68c vs 39c + Valuation: At 14 times next year's estimated earnings, the stock is still, even after Friday's big gain, attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 21c. + The company's industry group ("Pollution Control - Equipment") is ranked #53 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. I chose to buy the stock in spite of the following negative factor: - Strong but falling earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $1.84, revised downward from $1.86 90 days ago (and up from 2008 actual earnings of 85c); and the consensus estimate for 2010 is $1.94, revised downward from $2.22 90 days ago. Here's why I bought this stock: + Technical: This stock is one hot potato! It closed at $2.60 on April 8. It peaked at $17.50 on August 5. It quickly retreated to $11.29 on August 17. Since then, it's been generally edging higher again. Today, it is bouncing off of its 50-day moving average, where it has repeatedly found support. + Volume explosion: During the first half of this year, this stock traded less than 3,000 shares a day on average. Since then, average volume has soared more than a hundred-fold. The average now is closer to half a million shares. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +154%, +136%, +87%, and, most recently, for the quarter ended June 30, +18% to $40.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters: + Strong earnings-per-share estimates: The consensus earnings estimate for 2009 is $1.89; the consensus estimate for 2010 is $2.09. I have no data on how these estimates have changed over time. + Valuation: At less than 7 times next year's estimated earnings, the stock is attractively priced. I do not have a projected long-term earnings growth rate nor earnings surprise data for this little-known stock. + 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 #157 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling just slightly over recent weeks and months. -KD, Monday, November 16, 2009 Bought S&P Depositary Receipt (SPY)
* Buy prices shown are net after commissions and fees. Today, Monday, November 16, 2009, I bought SPY, for both client and my personal accounts. In honor of my change of stance this morning from bearish to bullish, I am buying more S&P 500. On the one hand, we still have about 20% cash. On the other hand, the individual stocks we do own (and the SSO ETF) are all much more volatile than the market. On balance, by my calculation, our portfolio is now a hair more volatile than the S&P. This is consistent with a bullish stance. In other words, we now stand a decent chance of outperforming ... if the market goes up from here. -KD, Monday, November 16, 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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