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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since July 24, 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 Ultra Clean Holdings (UCTT)
* Buy prices shown are net after commissions and fees. Today, Tuesday, July 27, 2010, I bought UCTT, for both client and my personal accounts. Ultra Clean Holdings, Inc. makes gas delivery and chemical mechanical planarization systems for the semiconductor capital equipment industry. Here's why I bought this stock: + Earnings surprise: Yesterday, after the close, the company announced results for the quarter ended June 30. Earnings came in at 25c per diluted share (vs a loss of (33c) last year and analysts' consensus 20c). Revenue was up 355% to $105.9 million (analysts' consensus $98.8 million). + Possible breakout: The price is up sharply this morning on extremely heavy volume. If this move holds at the close, it will be a breakout from a 3-month trading range to a new 24-month high. + Volume spike, mostly on the buy side: As I write this, two hours after the open, volume is already 4 times average. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -31%, +55%, +340%, and, most recently, for the quarter ended June 30, +355% to $105.9 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 09 vs Sep 08: (7c) vs (5c) Dec 09 vs Dec 08: 11c vs (19c) Mar 10 vs Mar 09: 17c vs (33c) Jun 10 vs Jun 09: 25c vs (33c) + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is 82c, revised upward from 66c 90 days ago (and up from a 2009 loss of (61c)); and the consensus estimate for 2011 is $1.26, revised upward from $1.15 90 days ago. + Valuation: At 8 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is still, even after this morning's big gain, very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 5c. + The company's industry group ("Elec - Semiconductor Equipment") is ranked #70 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, Tuesday, July 27, 2010 Sold S&P Depositary Receipt (SPY) +1.6%
* Buy and sell prices shown are net after commissions and fees. This means that the gain/loss shown is also net after transaction expenses. Today, Tuesday, July 27, 2010, I sold SPY, for both client and my personal accounts. I am selling just enough SPY (the S&P 500) to pay for UCTT. We are fully invested. -KD, Tuesday, July 27, 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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