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Market Stance: BULLISH (since May 24, 2016)
* An average of managed accounts, net after all commissions and fees.
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* Buy prices shown are net after commissions and fees.
Today, Thursday, May 26, 2016, I bought DY, for both client and my personal accounts.
Dycom Industries, Inc. provides engineering, construction, maintenance and installation services to telecommunications providers.
Here's why I bought this stock:
+ Earnings surprise: The day before yesterday, Tuesday, after the close, the company announced results for the quarter ended April 30. Earnings came in at $1.08 per diluted share (vs 58c last year and analysts' consensus 74c). Revenue was up 35% to $664.7 million (analysts' consensus $597.8 million).
+ Market reaction: The stock was up sharply yesterday on very heavy volume.
+ Volume spike, mostly on the buy side: Yesterday's volume was almost 7 times average,and 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: +20%, +29%, +27%, and, most recently, as cited above, +35%.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Jul 15 vs Jul 14: $0.97 vs $0.48 Oct 15 vs Oct 14: $1.24 vs $0.59 Jan 16 vs Jan 15: $0.54 vs $0.27 Apr 16 vs Apr 15: $1.08 vs $0.58
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 16 (ends July 2016) is $4.04, revised upward from $3.88 90 days ago (and up from FY 15 actual earnings of $2.41); and the consensus estimate for FY 17 is $4.92, revised upward from $4.65 90 days ago.
+ Valuation: At 17 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 34%, the stock may still be, even after yesterday's price jump, attractively priced.
+ History of earnings surprises: This company has reported earnings-per-share at least 9c above estimates in each of the past seven quarters, including the just-reported quarter cited above, which "beat the Street" by 34c.
+ The company's industry group ("Telecom - Infrastructure") is ranked #91 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.
+ The stock's 200-day moving average is rising, indicating a long-term uptrend.
-KD, Thursday, May 26, 2016
* 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, Thursday, May 26, 2016, I sold SPY, for both client and my personal accounts.
We sold just enough SPY to pay for DY. We remain fully invested.
-KD, Thursday, May 26, 2016
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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