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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, Tuesday, December 22, 2009, I bought CELG, for both client and my personal accounts. Celgene Corporation engages in the discovery, development, and commercialization of therapies to treat cancer and immune-inflammatory related diseases. This stock is a component of the S&P 500 and the NASDAQ 100 Indexes. Here's why I bought this stock: + News: Last Friday, Dec 18, before the open, the company announced strong evidence of the effectiveness of Revlimid, a blood cancer drug, as a follow-up therapy for multiple-myeloma patients who have had a stem cell transplant. The evidence comes from a Phase III clinical trial conducted by the National Cancer Institute. + A "true surprise"*: For two week prior to the news, the stock price was falling. The day before the news, the stock closed at a 6-week low. Then, Friday, the stock jumped +10.5% on heavy volume. Since then, the stock has continued to edge fractionally higher. * "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). + Volume spike: Friday's volume was more than 3 times average, and was a 4-month record. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +52%, +31%, +10%, and, most recently, for the quarter ended Sep 30, +17% to $695.1 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 08 vs Dec 07: 43c vs 31c Mar 09 vs Mar 08: 44c vs 36c Jun 09 vs Jun 08: 46c vs 37c Sep 09 vs Sep 08: 56c vs 40c + Strong earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is $2.08, revised upward from $2.05 90 days ago (and up from 2008 actual earnings of $1.56); and the consensus estimate for 2010 is $2.66, unchanged from 90 days ago. + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 24%, 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 six of the past seven quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 2c. + 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 ("Medical - Biomed / Biotech") is ranked #129 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, Tuesday, December 22, 2009 Sold Cyberonics Inc. (CYBX) +13.5%
* 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, Tuesday, December 22, 2009, I sold CYBX, first for client accounts, then for my personal accounts. This was a judgment call. I chose to cash in our solid 3-week double-digit profit in CYBX because of heavy-volume selling Friday and today. I am concerned that the stock may be topping out. -KD, Tuesday, December 22, 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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