|
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. Bought Hi-Tech Pharmacal Co. Inc. (HITK)
* Buy prices shown are net after commissions and fees. Today, Wednesday, December 9, 2009, I bought HITK, for both client and my personal accounts. Hi-Tech Pharmacal Co., Inc. develops, manufactures, markets, and sells generic, prescription, over-the-counter (OTC), and nutritional products in liquid and semi-solid dosage forms in the U.S. This stock is a component of the IBD 100 and the IBD New America Indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Blowout earnings surprise: This morning, Dec 9, before the open, the company announced results for the quarter ended Oct 31. Earnings came in at 60c per diluted share (vs 9c last year and analysts' consensus 32c). Revenue was up 63% to $40.9 million (analysts' consensus $33.0 million). + Market reaction: The stock is up sharply -- about 10% -- this morning on very heavy volume. Just over two hours after the opening bell, volume is already more than double the daily average. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +95%, +83%, +175%, and, most recently, as cited above, +63%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jan 09 vs Jan 08: 18c vs (14c) Apr 09 vs Apr 08: 45c vs 2c Jul 09 vs Jul 08: 73c vs 13c Oct 09 vs Oct 08: 60c vs 9c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 10 (ends Apr 30) is $1.42, revised upward from $1.05 90 days ago (and up from FY 09 actual earnings of 84c); and the consensus estimate for FY 11 is $1.30, revised upward from $1.10 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, 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 25c above estimates in each of the past three quarters, including the just-reported quarter cited above, which "beat the Street" by 28c. + The company's industry group ("Medical - Generic Drugs") is ranked #16 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 factors: - The earnings news this morning was not a "true surprise"* by my definition, because the stock price has been edging higher for the past week. * "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). - There is possible resistance at $25 -- the 3-year high set just two months ago. - Next year's earnings-per-share estimate of $1.30 is down from this year's estimate of $1.42. -KD, Wednesday, December 9, 2009 Sold S&P Depositary Receipt (SPY) -0.5%
* 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, Wednesday, December 9, 2009, I sold SPY, first for client accounts, then for my personal accounts. I am selling just enough SPY to pay for HITK. We remain fully invested. -KD, Wednesday, December 9, 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.
The Deen's List Copyright © 2009 Deen Capital Management, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||