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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 Radiant Systems Inc. (RADS)
* Buy prices shown are net after commissions and fees. Today, Friday, August 6, 2010, I bought RADS, for both client and my personal accounts. Radiant Systems, Inc. provides point-of-sale, self-service, and back-office management systems for the hospitality and retail industries. 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 26c per diluted share (vs 18c last year and analysts' consensus 21c). Revenue was up 22% to $87.0 million (analysts' consensus $81.3 million). + A "true surprise"*: For almost two weeks prior to the news, the stock was trading mostly sideways to slightly lower. Then, this morning, it is soaring on extremely heavy volume. * "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: If this morning's move holds, it represents a breakout from a 12-week trading range to a new 30-month high. + Volume spike, mostly on the buy side: Just two hours after the opening bell, volume is already nearly 4 times the daily average. + Mostly excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -14%, +3%, +18%, and, most recently, as cited above, +22%. + Mostly excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 09 vs Sep 08: 18c vs 18c Dec 09 vs Dec 08: 25c vs 19c Mar 10 vs Mar 09: 17c vs 14c Jun 10 vs Jun 09: 26c vs 18c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is 83c, revised upward from 78c 90 days ago (and up from 2009 actual earnings of 76c); and the consensus estimate for 2011 is 97c, revised upward from 89c 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 still, even after this morning's big gain, moderately priced. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past seven quarters, including the just-reported quarter cited above, which "beat the Street" by 5c. + 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 - Integrated Systems") is ranked #42 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, Friday, August 6, 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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