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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 China-Biotics Inc. (CHBT)
* Buy prices shown are net after commissions and fees. Today, Friday, November 20, 2009, I bought CHBT, for both client and my personal accounts. China-Biotics, Inc. researches, develops, produces, markets, and distributes probiotics products in China. Its products contain live microbial food supplements, which affect the host by improving its intestinal microbial balance. Here's why I bought this stock: + News: Last Tuesday, Nov 17, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 31c per diluted share (vs 13c last year and analysts' consensus 25c). Revenue was up 49% to $17.1 million (analysts' consensus $14.8 million). + On both Monday and Tuesday, the stock was up sharply on heavy volume. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +33%, +19%, +36%, and, most recently, as cited above, +49%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 08 vs Dec 07: 22c vs 23c Mar 09 vs Mar 08: 33c vs 27c Jun 09 vs Jun 08: 31c vs 26c Sep 09 vs Sep 08: 31c vs 13c + Valuation: At 10 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 32%, the stock is still, even after Tuesday's big gain, very attractively priced. + The company's industry group ("Cosmetics / Personal Care") 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 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 FY 10 (ends March 31) is $1.27, revised downward from $1.62 90 days ago (but up from FY 09 actual earnings of 99c); and the consensus estimate for FY 11 is $1.53, revised downward from $2.42 90 days ago. -KD, Friday, November 20, 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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