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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 Ballantyne Strong, Inc. (BTN)
* Buy prices shown are net after commissions and fees. Today, Monday, August 9, 2010, I bought BTN, for both client and my personal accounts. Ballantyne Strong, Inc. manufactures theater exhibition equipment such as digital projectors, Xenon lamps, and spare parts. Here's why I bought this stock: + Earnings surprise: This morning, before the open, the company announced results for the quarter ended June 30. Earnings came in at 14c per diluted share (vs 7c last year and analysts' consensus of a loss of (1c)). Revenue was up 67% to $32.8 million (analysts' consensus $19.6 million). + A "true surprise"*: For four weeks prior to the news, the stock was trading in a tight range around $8. Today, it is up sharply 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 the move I'm seeing now holds at the close, this will be a breakout from a 3-month range to a new 10-year high. + Volume spike, mostly on the buy side: As I write this, volume is more than 8 times the daily average, and has already set a 12-month record. + Excellent and accelerating recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +34%, +28%, +48%, and, most recently, as cited above, +67%. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 09 vs Sep 08: 4c vs 2c Dec 09 vs Dec 08: 1c vs (4c) Mar 10 vs Mar 09: 7c vs 4c Jun 10 vs Jun 09: 14c vs 7c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is 26c, revised upward from 22c 90 days ago (and up from 2009 actual earnings of 15c). (Estimates for 2011 are not available.) + History of earnings surprises: This company "beat the Street" by 6c the prior quarter (ended March 2010) and now, as cited above, 15c for the June quarter. + The company's industry group ("Leisure - Movies & Related") is ranked #21 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. I chose to buy the stock in spite of the following negative factor: - Valuation: At 36 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is a bit pricey by my usual metric. -KD, Monday, August 9, 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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