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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since June 18, 2010) Contents
Typical Client 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 Entropic Communications (ENTR)
* Buy prices shown are net after commissions and fees. Today, Monday, June 21, 2010, I bought ENTR, for both client and my personal accounts. Entropic Communications, Inc., a fabless semiconductor company, designs, develops, and markets systems solutions to enable connected home entertainment. Here's why I bought this stock: + News: Late last week, Comcast announced that it will offer a multi-room DVR service. This will allow customers to watch programs recorded in one room on televisions in other rooms. Entropic provides chips used in this MoCA (Multimedia Over Coax Alliance) technology. + Breakout: On Friday, the stock shot up 17% on huge volume, more than 5 times average. This was a breakout from a 10-week trading range to a new 2-year high. + Today, the stock gave back some of Friday's gain. I am using today's weakness as a buying opportunity. + Dramatic turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -39%, -2%, +19%, and, most recently, for the quarter ended March 31, +55% to $37.5 million. + Recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jun 09 vs Jun 08: (1c) vs 2c Sep 09 vs Sep 08: 2c vs (2c) Dec 09 vs Dec 08: 5c vs (1c) Mar 10 vs Mar 09: 6c vs (6c) + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is 30c, revised upward from 28c 90 days ago (and up from 2009 actual earnings of 1c); and the consensus estimate for 2011 is 47c, revised upward from 45c 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 22%, the stock is still, even after yesterday's big gain, very attractively priced. + History of earnings surprises: This company has reported earnings-per-share exactly 1c above estimates in each of the past five quarters. + The company's industry group ("Elec - Semiconductor Mfg") is ranked #17 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, Monday, June 21, 2010
* Buy prices shown are net after commissions. 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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