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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. Bought China Automotive Systems (CAAS)
* Buy prices shown are net after commissions and fees. Today, Wednesday, December 23, 2009, I bought CAAS, for both client and my personal accounts. China Automotive Systems, Inc., manufactures and sells automotive systems and components for the Chinese automobile industry. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Technical: This stock, which is in a strong medium- to long-term uptrend, has taken a dip recently. It has fallen from $21.11 on Dec 3 to $16.42 yesterday, Dec 22. The last 3 days we've seen accelerating selling on heavy volume. Today, however, the stock is up on still heavier volume. Today's move also represents a bounce off of the rising 50-day moving average. I view this as an end-of-dip buying opportunity. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +2%, +8%, +34%, and, most recently, for the quarter ended Sep 30, +75% to $64.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 08 vs Dec 07: 2c vs 9c Mar 09 vs Mar 08: 8c vs 18c Jun 09 vs Jun 08: 21c vs 18c Sep 09 vs Sep 08: 28c vs 9c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2009 is 66c, revised upward from 53c 90 days ago (and up from 2008 actual earnings of 46c); and the consensus estimate for 2010 is 83c, revised upward from 62c 90 days ago. + Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 37%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 9c above estimates in each of the past two quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 13c. + The company's industry group ("Auto/Truck - Original Equipment") is ranked #4 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising slightly over recent weeks and months. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, Wednesday, December 23, 2009 Bought China Agritech Inc. (CAGC)
* Buy prices shown are net after commissions and fees. Today, Wednesday, December 23, 2009, I bought CAGC, for both client and my personal accounts. China Agritech, Inc., manufactures and sells organic liquid compound fertilizers and related agricultural products in China. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: This morning, before the open, the company announced that it has achieved its 2009 sales target and cited a bullish outlook for 2010. + A "true surprise"*: For two weeks prior to the news, The stock has been trading mostly lower. Yesterday was a particularly strong down day. But, today, it is up sharply on heavy volume, recovering yesterday's loss and then some. * "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). + Sharp turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -10%, +0%, +57%, and, most recently, for the quarter ended Sep 30, +67% to $27.0 million. + Turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Dec 08 vs Dec 07: 16c vs 24c Mar 09 vs Mar 08: 16c vs 20c Jun 09 vs Jun 08: 88c vs 48c Sep 09 vs Sep 08: 81c vs 56c Estimates are not available for this little known stock. + Valuation: At 14 times trailing 12-month earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is still, even after today's big gain, attractively priced. + The company's industry group ("Chemicals - Fertilizers") is ranked #134 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. -KD, Wednesday, December 23, 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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