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: +71.3% for the 60 months ending January 25, 2018 (vs. +108.3% for the S&P)
For complete performance data, click here
Vol.16 #13 Friday, January 26, 2018 11:34AM EST

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

Market Stance: BULLISH (since December 8, 2017)

Contents

Typical Client Performance
Bought Live Oak Bancshares, Inc. (LOB)
Bought SPDR S&P 500 ETF (SPY)
Sold Electro Scientific Inds (ESIO) -8.2%
Typical Client Portfolio
Subscription Information
Privacy Policy
Disclaimers
Contact Us

Typical Client Performance

Deen Capital S&P 500
Year-to-date as of January 25, 2018 +3.2% * +6.3%
12 months (Jan 25, 2017 to Jan 25, 2018) +19.6% * +25.9%
24 months (Jan 25, 2016 to Jan 25, 2018) +51.1% * +57.3%
36 months (Jan 25, 2015 to Jan 25, 2018) +34.0% * +46.8%
48 months (Jan 25, 2014 to Jan 25, 2018) +36.2% * +71.4%
60 months (Jan 25, 2013 to Jan 25, 2018) +71.3% * +108.3%

* 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 Live Oak Bancshares, Inc. (LOB)

Initial percent of portfolio (approx.)9.1%
Net buy price in managed accounts*$27.16
Most recent close (Jan 25)$26.95
Net change (based on net buy price)+0.21
Today's volume as of 11:34AM EST131,656 ($3.6 million)
Average daily volume85,900 ($2.3 million)
This year's earnings-per-share$1.17 (est)
Next year's earnings-per-share$1.56 (est)
P/E using next year's earnings17.4 (est)
Earnings growth rate, next 5 yearsn/a

* Buy prices shown are net after commissions and fees.

Today, Friday, January 26, 2018, I bought LOB, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: Yesterday, Jan 25, before the open, the company announced results for the quarter ended Dec 31. Earnings came in at 41c per diluted share (vs 17c last year and analysts' consensus 27c). Revenue was up 191% to $126.0 million (analysts' consensus $52.0 million).

+ A "true surprise"*: Prior to the news, the stock was trading in a sideways pattern. Then, yesterday, the stock jumped 10% on heavy volume.

* "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term run-up in the stock price (i.e. not preceded by rumor).

+ Breakout: The price movement yesterday represents a breakout from a 2-month range to a new all-time high.

+ Excellent recent revenue growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +36%, +56%, +30%, and, most recently, as cited above, +191%.

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

Mar 17 vs Mar 16: 19c vs 13c
Mar 17 vs Mar 16: 28c vs 11c
Jun 17 vs Jun 16: 34c vs 16c
Sep 17 vs Sep 16: 41c vs 17c

+ Strong and rising earnings-per-share estimates for next year: According to recent data from First Call, the consensus earnings estimate for 2018 is $1.17, unchanged from 90 days ago (and down from 2017 actual earnings of $1.26); and the consensus estimate for 2019 is $1.56, revised upward from $1.47 90 days ago.

Valuation: At 17 times next year's estimated earnings, the stock price is, in my opinion, within reason.

+ History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 14c.

+ 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 factors:

- The company's industry group ("Banks - Southeast") is ranked #135 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, Friday, January 26, 2018

Bought SPDR S&P 500 ETF (SPY)

Initial percent of portfolio (approx.)9.0%
Net buy price in managed accounts*$284.79
Most recent close (Jan 25)$283.30
Net change (based on net buy price)+1.49
Today's volume as of 11:34AM EST21.5 million ($6.1 billion)
Average daily volume81.6 million ($23.2 billion)

* Buy prices shown are net after commissions and fees.

Today, Friday, January 26, 2018, I bought SPY, for both client and my personal accounts.

After buying LOB, I put all remaining cash (proceeds from sells made yesterday and this morning) to work in this proxy for the S&P 500.

-KD, Friday, January 26, 2018

Sold Electro Scientific Inds (ESIO) -8.2%

Net sell price in managed accounts*$24.05
Date(s) boughtJan 18 2018
Net buy price in managed accounts*$26.21
Holding period1.1 weeks
Gain/loss in managed accounts*-8.2% (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, January 26, 2018, I sold ESIO, for both client and my personal accounts.

I sold ESIO due to a sell signal from my proprietary StockSell Program. This signal is based purely on short-term technical factors. Longer term, I still like this stock.

-KD, Friday, January 26, 2018

Typical Client Portfolio

Company Name Stock
Symbol
Buy
Date
NetBuy
Price*
Current
Price**
Weeks
Held
% of
Portfolio
Gain
(Loss)
SPDR S&P 500 ETF SPY 01/26/18 $284.79 $284.75 0.0 16.6% -0.0%
Live Oak Bancshares, Inc. LOB 01/26/18 $27.16 $26.85 0.0 9.1% -1.1%
Forward Air Corp. FWRD 01/11/18 $60.50 $61.90 2.1 9.3% +2.3%
SPDR S&P 500 ETF SPY 01/10/18 $273.76 $284.75 2.3 27.6% +4.0%
iShares Core S&P 500 IVV 12/29/17 $269.64 $286.85 4.0 8.3% +6.4%
SPDR S&P 500 ETF SPY 12/08/17 $265.44 $284.75 7.0 29.0% +7.3%
Cash 0.1%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

Subscription Information

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.

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.

Privacy Policy

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.

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.

Contact Us

The Deen's List
PO Box 30925
Santa Barbara, CA 93130
(800) 353-4990
deenslist@deencapital.com

Copyright © 2018 Deen Capital Management, Inc.