|
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, Tuesday, July 20, 2010, I bought CYBX, for both client and my personal accounts. Cyberonics, Inc., designs, develops, manufactures and sells implantable medical devices that provide vagus nerve stimulation (VNS) therapy for the treatment of refractory epilepsy and treatment-resistant depression. Here's why I bought this stock: + This stock was a strong buy on my radar screen back on June 3, when it broke out of a five-month trading range to a new 22-month high. The stock continued almost straight up from there for the next three weeks. All this buying frenzy was accompanied by a marked increase in average volume. Since peaking in late June, the stock has come down some on generally lighter volume, enabling us to buy at a price that is within the June 3 range. The post-earnings-surprise rally impressed me considerably. I view this recent price drop as a second 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: +14%, +13%, +16%, and, most recently, for the quarter ended April 30, +24% to $47.7 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jul 09 vs Jul 08: 23c vs 8c Oct 09 vs Oct 08: 32c vs 14c Jan 10 vs Jan 09: 29c vs 15c Apr 10 vs Apr 09: 40c vs 22c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 11 (ends Apr 30) is 98c, revised upward from 95c 90 days ago (but down from FY 10 actual earnings of $1.24); and the consensus estimate for FY 12 is $1.22, revised upward from $1.16 90 days ago. + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 4c above estimates in each of the past ten quarters. Most recently, for the quarter ended April 30, they "beat the Street" by 7c. + 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 factors: - The company's industry group ("Medical Products") is ranked #83 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. - As can be seen from data above, both the FY 11 and FY 12 earnings estimates are below the actual FY 10 results. -KD, Tuesday, July 20, 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.
The Deen's List Copyright © 2010 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||