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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since June 25, 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 Tibco Software Inc. (TIBX)
* Buy prices shown are net after commissions and fees. Today, Friday, June 25, 2010, I bought TIBX, for both client and my personal accounts. TIBCO Software Inc. provides business application and database integration, process automation, management and optimization software. This stock is a component of the S&P 400 Midcap Index. Here's why I bought this stock: + Yes, I'm bearish, but only mildly so. And I'm still, even after this buy, 65% in cash. + News: Yesterday, after the close, the company announced results for the quarter ended May 31. Earnings came in at 15c per diluted share (vs 11c last year and analysts' consensus 13c). Revenue was up 21% to $173.3 million (analysts' consensus $161.5 million). + A "true surprise"*: For six days prior to the news, the stock had been edging lower. Then, today, the stock is up sharply on heavy volume, more than 2x average. * "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). + Breakout: Today's move represents a breakout from a six-week range to a new 5-year high. + Accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -7%, +5%, +17%, and, most recently, as cited above, +21%. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jun 09 vs Jun 08: 13c vs 11c Sep 09 vs Sep 08: 23c vs 23c Dec 09 vs Dec 08: 12c vs 9c Mar 10 vs Mar 09: 15c vs 11c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 10 (ends Nov 30) is 65c, revised upward from 62c 90 days ago (and up from FY 09 actual earnings of 55c); and the consensus estimate for FY 11 is 75c, revised upward from 69c 90 days ago. + Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 14%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in each of the past five quarters, including the just-reported quarter cited above, which "beat the Street" by 2c. + The company's industry group ("Computer Software - Database") is ranked #52 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, Friday, June 25, 2010
* Buy prices shown are net after commissions. ** 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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