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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since December 1, 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.
* Buy prices shown are net after commissions and fees. Today, Wednesday, December 2, 2009, I bought CYBX, for both client and my personal accounts. Cyberonics, Inc., makes implantable medical devices that provide vagus nerve stimulation (VNS) therapy for the treatment of refractory epilepsy and treatment-resistant depression. Here's why I bought this stock: + Recent breakout: Back on November 23, the stock jumped 7% on heavy volume. Since then, it has pulled back a bit. The stock is now sitting right at the breakout pivot point, around $18. + Technical: There have been five heavy volume days over the past two weeks (Nov 23 was one of them). All have been up days. I deduce that there probably are new buyers coming into this stock. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +20%, +14%, +14%, and, most recently, for the quarter ended Oct 31, +13% to $40.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jan 08 vs Jan 07: 15c vs (4c) Apr 09 vs Apr 08: 22c vs 11c Jul 09 vs Jul 08: 23c vs 8c Oct 09 vs Oct 08: 32c vs 14c + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 29%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 4c above estimates in each of the past nine quarters. Most recently, for the quarter ended Oct 31, they "beat the Street" by 12c. + 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: - Weak and slightly falling earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for FY 10 (ends Apr 30) is $1.08, revised upward from 86c 90 days ago (and up from FY 09 actual earnings of 58c); but the consensus estimate for FY 11 is 98c, lower than the FY 10 estimate, and revised downward from $1.01 90 days ago. - The company's industry group ("Medical Products") is ranked #111 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, Wednesday, December 2, 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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