The Deen's ListTM
A service of Deen Capital Management, Inc. (www.deencapital.com)
Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +57.9% for the 60 months ending January 10, 2011 (vs. +9.0% for the S&P)
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Vol.9 #8 Tuesday, January 11, 2011 11:56AM EST

Please read carefully our disclaimers at the end of this newsletter.

Market Stance: BULLISH (since December 1, 2010)

Contents

Typical Client Performance
Bought Interactive Intelligence (ININ)
Typical Client Portfolio
Subscription Information
Privacy Policy
Disclaimers
Contact Us

Typical Client Performance

Deen Capital S&P 500
Year-to-date as of January 10, 2011 +0.8% * +1.0%
12 months (Jan 10, 2010 to Jan 10, 2011) +8.1% * +13.0%
24 months (Jan 10, 2009 to Jan 10, 2011) +48.6% * +48.8%
36 months (Jan 10, 2008 to Jan 10, 2011) +7.9% * -4.4%
48 months (Jan 10, 2007 to Jan 10, 2011) +33.8% * -2.4%
60 months (Jan 10, 2006 to Jan 10, 2011) +57.9% * +9.0%

* An average of managed accounts, net after all commissions and fees.

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Click here for information on managed accounts.

Bought Interactive Intelligence (ININ)

Initial percent of portfolio (approx.)6.0%
Net buy price in managed accounts*$36.56
Most recent close (Jan 10)$29.41
Net change (based on net buy price)+7.15
Today's volume as of 12:59pm EST439,107 ($16.1 million)
Average daily volume111,900 ($4.1 million)
This year's earnings-per-share$1.16 (est)
Next year's earnings-per-share$1.23 (est)
P/E using next year's earnings29.7 (est)
Earnings growth rate, next 5 years16% per year (est)
Corporate HeadquartersIndianapolis, IN
Web sitewww.inin.com

* Buy prices shown are net after commissions and fees.

Today, Tuesday, January 11, 2011, I bought ININ, for both client and my personal accounts.

Interactive Intelligence, Inc. develops contact center communications software and mission critical VoIP applications for large organizations.

Here's why I bought this stock:

+ News: Yesterday evening, the company announced preliminary results for the fourth quarter of 2010. The expect to report revenue between $49.0 million and $51.0 million (vs. consensus estimate $43.9 million), and non-GAAP earnings of 48c to 52c per diluted share (vs. consensus estimate 31c).

+ Breakout: The stock is up sharply on extremely heavy volume. If this move holds, it will be a breakout from a 3-year trading range to a new 10-year high.

+ Volume spike, mostly on the buy side: As I write this, roughly midway through the trading day, volume is already almost 4 times the full-day 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: +10%, +57%, +91%, and, now, for the December quarter, we're looking at a huge gain in excess of +500%.

+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:

Dec 09 vs Dec 08: 27c vs 18c
Mar 10 vs Mar 09: 22c vs 16c
Jun 10 vs Jun 09: 26c vs 24c
Sep 10 vs Sep 09: 37c vs 31c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2010 is $1.16, revised upward from $0.97 90 days ago (and up from 2009 actual earnings of $0.99); and the consensus estimate for 2011 is $1.23, revised upward from $1.05 90 days ago.

+ The company's industry group ("Telecom - Infrastructure") is ranked #5 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been fairly stable 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 30 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 16%, the stock may be a bit pricey. On the other hand, on the strength of last night's spectacular surprise, I am wondering if these earnings and growth estimates may be low.

-KD, Tuesday, January 11, 2011

Typical Client Portfolio

Company Name Stock
Symbol
Buy
Date
NetBuy
Price*
Current
Price**
Weeks
Held
% of
Portfolio
Gain
(Loss)
Interactive Intelligence ININ 01/11/11 $36.56 $36.78 0.0 5.0% +0.6%
Molex Inc. Cl A MOLXA 01/10/11 $20.09 $20.16 0.1 4.9% +0.3%
Alliance Fiber Optic AFOP 01/07/11 $17.40 $18.69 0.6 6.5% +7.4%
Ameresco, Inc. AMRC 12/29/10 $13.65 $15.68 1.9 6.6% +14.8%
Jabil Circuit Inc. JBL 12/21/10 $19.48 $21.03 3.0 4.8% +7.9%
Dice Holdings, Inc. DHX 12/13/10 $13.34 $14.54 4.1 5.2% +9.0%
Korn/Ferry International KFY 12/08/10 $19.60 $23.14 4.9 5.3% +18.0%
TTM Technologies, Inc. TTMI 12/06/10 $14.13 $14.26 5.1 5.8% +0.9%
S&P Depositary Receipt SPY 12/01/10 $120.47 $127.72 5.9 43.2% +6.0%
Buckeye Tech Inc. BKI 11/24/10 $20.13 $21.99 6.9 6.2% +9.2%
DDi Corp. DDIC 11/22/10 $10.84 $11.73 7.1 6.1% +8.2%
Cash 0.6%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

Subscription Information

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Disclaimers

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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