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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since September 1, 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 Cirrus Logic Inc. (CRUS)
* Buy prices shown are net after commissions and fees. Today, Wednesday, September 1, 2010, I bought CRUS, for both client and my personal accounts. Cirrus Logic, Inc. develops high-precision analog and mixed-signal integrated circuits (ICs) and embedded software for consumer/commercial audio, industrial, and energy markets. This stock is a component of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + Technical: In spite of having dropped from around $20 to around $15 during August, this stock remains in an impressive long-term uptrend. It was around $5 12 months ago. Also, there has been a dramatic increase in average daily volume since late April. Most of this new volume has been on the buy side. Today, the stock is up nicely, on an uptick in volume, apparently breaking the strong August downtrend. In other words, we have the possible end of a strong short-term downtrend in the context of an even stronger long-term uptrend. This, combined with what I perceive to be a shift in market psychology, just might spell "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: +4%, +49%, 87%, and, for the quarter ended June 30, +118% to $81.9 million. + Dramatic turnaround in recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 09 vs Sep 08: 11c vs 15c Dec 09 vs Dec 08: 19c vs 7c Mar 10 vs Mar 09: 16c vs (1c) Jun 10 vs Jun 09: 29c vs (1c) + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 11 (ends March 31) is $1.44, revised upward from $1.06 90 days ago (and up from FY 10 actual earnings of 44c); and the consensus estimate for FY 12 is $1.54, revised upward from $1.13 90 days ago. + Valuation: At 11 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in eight of the past ten quarters. Most recently, as cited above, they beat by a penny. + 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 ("Elec - Semiconductor Fabless") is ranked #36 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, Wednesday, September 1, 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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