The Deen's ListTM
A service of Deen Capital Management, Inc. (
Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +40.8% for the 60 months ending October 20, 2016 (vs. +94.8% for the S&P)
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Vol.14 #231 Friday, October 21, 2016 2:38PM EDT

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Market Stance: BEARISH (since October 15, 2016)


Typical Client Performance
Bought Paypal Holdings Inc. (PYPL)
Sold SPDR S&P 500 ETF (SPY) -0.0%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of October 20, 2016 +6.9% * +6.5%
12 months (Oct 20, 2015 to Oct 20, 2016) +3.8% * +7.7%
24 months (Oct 20, 2014 to Oct 20, 2016) +11.8% * +17.1%
36 months (Oct 20, 2013 to Oct 20, 2016) +5.5% * +30.2%
48 months (Oct 20, 2012 to Oct 20, 2016) +30.5% * +61.8%
60 months (Oct 20, 2011 to Oct 20, 2016) +40.7% * +94.8%

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

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Bought Paypal Holdings Inc. (PYPL)

Initial percent of portfolio (approx.)9.2%
Net buy price in managed accounts*$43.78
Most recent close (Oct 20)$40.09
Net change (based on net buy price)+3.69
Today's volume as of 2:56pm EDT29.6 million ($1.3 billion)
Average daily volume7.4 million ($325.1 million)
This year's earnings-per-share$1.50 (est)
Next year's earnings-per-share$1.73 (est)
P/E using next year's earnings25.3 (est)
Earnings growth rate, next 5 years17% per year (est)
Corporate HeadquartersSan Jose, CA

* Buy prices shown are net after commissions and fees.

Today, Friday, October 21, 2016, I bought PYPL, for both client and my personal accounts.

PayPal Holdings, Inc. provides digital and mobile payments on behalf of consumers and merchants worldwide.

This stock is a component of the S&P 500, the S&P 100, and the NASDAQ 100.

Here's why I bought this stock:

+ Earnings news: Yesterday, Oct 20, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 35c per diluted share (vs 31c last year and analysts' consensus 35c). Revenue was up 18% to $2.67 billion (analysts' consensus $2.67 billion).

+ Breakout: The stock is up sharply today on heavy volume, breaking out from a 7-month range.

+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +17%, +19%, +15%, and, most recently, as cited above, +18%.

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

Dec 15 vs Dec 14: 36c vs 29c
Mar 16 vs Mar 15: 37c vs 30c
Jun 16 vs Jun 15: 36c vs 33c
Sep 16 vs Sep 15: 35c vs 31c

Valuation: At 25 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock may not be a bargain, but is at leas at priced within reason.

+ The company's industry group ("Finance - Credit Card / Payment Processing") is ranked #106 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising slightly 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:

- Strong but falling earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for 2016 is $1.50, revised upward from $1.49 90 days ago (and up from 2015 actual earnings of $1.30); and the consensus estimate for 2017 is $1.73, revised upward from $1.76 90 days ago.

-KD, Friday, October 21, 2016

Sold SPDR S&P 500 ETF (SPY) -0.0%

Net sell price in managed accounts*$213.32
Date(s) boughtOct 12 2016
Net buy price in managed accounts*$213.42
Holding period1.3 weeks
Gain/loss in managed accounts*-0.0% (after commissions)

* 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, Friday, October 21, 2016, I sold SPY, for both client and my personal accounts.

I sold just enough SPY to pay for PYPL. We remain fully invested.

-KD, Friday, October 21, 2016

Typical Client Portfolio

Company Name Stock
% of
Paypal Holdings Inc. PYPL 10/21/16 $43.78 $43.97 0.0 9.2% +0.4%
UnitedHealth Group Inc. UNH 10/18/16 $143.72 $144.88 0.4 9.2% +0.8%
iShares Core S&P 500 IVV 10/18/16 $215.17 $215.16 0.4 39.8% -0.0%
iShares Core S&P 500 IVV 10/14/16 $215.90 $215.16 1.0 24.8% -0.3%
SPDR S&P 500 ETF SPY 10/12/16 $213.42 $213.94 1.3 16.9% +0.2%
Cash 0.0%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

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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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