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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.
* Buy prices shown are net after commissions and fees. Today, Monday, July 19, 2010, I bought IGTE, for both client and my personal accounts. iGATE Corp. provides information technology, business process outsourcing, and clinical research services via offshore centers. Here's why I bought this stock: + News: Last Wednesday, July 14, before the open, the company announced results for the quarter ended June 30. Earnings came in at 20c per diluted share (vs 11c last year and analysts' consensus 17c). Revenue was up 43% to $63.8 million (analysts' consensus $61.2 million). + Mini-breakout: The stock shot up 14% that day on extremely heavy volume. This move was a mini-breakout from a three-and-a-half week trading range to a new 9-year high. + Volume spike, mostly on the buy side: Wednesday's volume was more than 7x average. + Mostly excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -11%, +2%, +29%, and, most recently, as cited above, +43%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 09 vs Sep 08: 16c vs 15c Dec 09 vs Dec 08: 15c vs 12c Mar 10 vs Mar 09: 18c vs 9c Jun 10 vs Jun 09: 20c vs 11c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is 77c, revised upward from 70c 90 days ago (and up from 2009 actual earnings of 51c); and the consensus estimate for 2011 is 88c, revised upward from 80c 90 days ago. + Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is still, even after last week's big gain, attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in four of the past five quarters. Most recently, as cited above, they "beat the Street" by 3c. + 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 ("Computer - Tech Services") is ranked #98 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, Monday, July 19, 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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