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: +70.3% for the 60 months ending January 17, 2018 (vs. +108.6% for the S&P)
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Vol.16 #9 Thursday, January 18, 2018 1:29PM EST

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Market Stance: BULLISH (since December 8, 2017)


Typical Client Performance
Bought Electro Sci Industries (ESIO)
Sold iShares Core S&P 500 (IVV) +4.3%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of January 17, 2018 +3.6% * +4.9%
12 months (Jan 17, 2017 to Jan 17, 2018) +22.1% * +25.9%
24 months (Jan 17, 2016 to Jan 17, 2018) +52.1% * +55.0%
36 months (Jan 17, 2015 to Jan 17, 2018) +36.4% * +47.2%
48 months (Jan 17, 2014 to Jan 17, 2018) +32.5% * +64.8%
60 months (Jan 17, 2013 to Jan 17, 2018) +70.7% * +108.6%

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

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Bought Electro Sci Industries (ESIO)

Initial percent of portfolio (approx.)9.1%
Net buy price in managed accounts*$26.21
Most recent close (Jan 17)$22.01
Net change (based on net buy price)+4.20
Today's volume as of 1:29PM EST5.6 million ($145.9 million)
Average daily volume1.3 million ($33.4 million)
This year's earnings-per-share$1.83 (est)
Next year's earnings-per-share$1.44 (est)
P/E using next year's earnings18.2 (est)
Earnings growth rate, next 5 years12% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Thursday, January 18, 2018, I bought ESIO, for both client and my personal accounts.

Here's why I bought this stock:

+ News: Yesterday, Jan 17, after the close, the company announced preliminary results for the quarter ended Dec 30. Revenue will be between $106 and $111 million (analysts were estimating $85 million). Earnings should "exceed the guided range provided November 1".

+ Market reaction: The stock is up sharply this morning on extremely heavy volume.

+ Dramatic turnaround in recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -22%, -3%, +52%, and, most recently, for the quarter ended Sep 30, +139% to $71.0 million.

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

Dec 16 vs Dec 15: (23c) vs   1c
Mar 17 vs Mar 16:   9c  vs  11c
Jun 17 vs Jun 16:  38c  vs   9c
Sep 17 vs Sep 16:  39c  vs (24c)

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 18 (ends March 31) is $1.83, revised upward from $0.73 90 days ago (and up from FY 17 actual loss of (29c)); and the consensus estimate for FY 19 is $1.44, revised upward from $0.82 90 days ago.

Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is, by my usual metric, may not be a bargain, but is at least priced within reason.

+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 12c.

+ 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 Eqp") is ranked #87 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, Thursday, January 18, 2018

Sold iShares Core S&P 500 (IVV) +4.3%

Net sell price in managed accounts*$281.28
Date(s) boughtDec 28 2017; Dec 29 2017
Net buy price in managed accounts*$269.63
Holding period3.0 weeks
Gain/loss in managed accounts*+4.3% (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, Thursday, January 18, 2018, I sold IVV, for both client and my personal accounts.

I sold just enough IVV to pay for ESIO. We remain fully invested.

-KD, Thursday, January 18, 2018

Typical Client Portfolio

Company Name Stock
% of
Ichor Holdings, Ltd. ICHR 01/18/18 $32.38 $32.68 0.0 9.2% +0.9%
Electro Sci Industries ESIO 01/18/18 $26.21 $26.05 0.0 9.0% -0.6%
Forward Air Corp. FWRD 01/11/18 $60.50 $61.85 1.0 9.2% +2.2%
SPDR S&P 500 ETF SPY 01/10/18 $273.76 $279.30 1.1 26.9% +2.0%
iShares Core S&P 500 IVV 12/29/17 $269.64 $281.35 2.9 17.2% +4.3%
SPDR S&P 500 ETF SPY 12/08/17 $265.44 $279.30 5.9 28.3% +5.2%
Cash 0.1%  
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.

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