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: +70.4% for the 60 months ending January 29, 2018 (vs. +108.6% for the S&P)
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Vol.16 #15 Tuesday, January 30, 2018 11:41AM EST

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Market Stance: BULLISH (since December 8, 2017)


Typical Client Performance
Bought Extreme Networks Inc. (EXTR)
Sold iShares Core S&P 500 (IVV) +5.4%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of January 29, 2018 +2.9% * +6.8%
12 months (Jan 29, 2017 to Jan 29, 2018) +19.3% * +26.7%
24 months (Jan 29, 2016 to Jan 29, 2018) +46.1% * +52.9%
36 months (Jan 29, 2015 to Jan 29, 2018) +35.8% * +49.7%
48 months (Jan 29, 2014 to Jan 29, 2018) +35.6% * +73.8%
60 months (Jan 29, 2013 to Jan 29, 2018) +69.3% * +108.6%

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

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Bought Extreme Networks Inc. (EXTR)

Initial percent of portfolio (approx.)8.3%
Net buy price in managed accounts*$15.18
Most recent close (Jan 29)$13.76
Net change (based on net buy price)+1.42
Today's volume as of 12:19PM EST7.2 million ($108.7 million)
Average daily volume1.8 million ($27.2 million)
This year's earnings-per-share$0.75 (est)
Next year's earnings-per-share$1.10 (est)
P/E using next year's earnings13.8 (est)
Earnings growth rate, next 5 years20% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Tuesday, January 30, 2018, I bought EXTR, for both client and my personal accounts.

The news on this stock today is that it will join the S&P 600 Smallcap Index.

Here's why I bought this stock:

+ Breakout: The stock is up sharply this morning on heavy volume, breaking out of a 2-month range to a new 16-year high.

+ Volume spike, mostly on the buy side: As I write this, it is shortly past noon in New York, and volume is more than 3x the daily average, and is on track to 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: +6%, +19%, +28%, and, most recently, for the quarter ended Sep 30, +73% to $211.7 million.

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

Dec 16 vs Dec 15: 12c vs  9c
Mar 17 vs Mar 16: 10c vs  3c
Jun 17 vs Jun 16: 17c vs 10c
Sep 17 vs Sep 16: 16c vs  7c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 18 (ends Jun 30) is 75c, revised upward from 65c 90 days ago (and up from FY 17 actual earnings of 46c); and the consensus estimate for FY 19 is $1.10, revised upward from 74c 90 days ago.

+ Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock may still be, even after today's price jump, attractively priced.

+ History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in each of the past four quarters. Most recently, for the quarter ended Sep 30, they "beat the Street" by 2c.

+ The company's industry group ("Computer - Networking") is ranked #3 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally stable to rising over recent weeks and months.

+ The stock's 200-day moving average is rising, indicating a long-term uptrend.

-KD, Tuesday, January 30, 2018

Sold iShares Core S&P 500 (IVV) +5.4%

Net sell price in managed accounts*$284.23
Date(s) boughtDec 29 2017
Net buy price in managed accounts*$269.64
Holding period4.6 weeks
Gain/loss in managed accounts*+5.4% (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, Tuesday, January 30, 2018, I sold IVV, for both client and my personal accounts.

I sold IVV in order to pay for EXTR. We remain fully invested.

-KD, Tuesday, January 30, 2018

Typical Client Portfolio

Company Name Stock
% of
Extreme Networks Inc. EXTR 01/30/18 $15.18 $15.18 0.0 8.3% -0.0%
SPDR S&P 500 ETF SPY 01/26/18 $284.79 $281.96 0.6 16.6% -1.0%
Live Oak Bancshares, Inc. LOB 01/26/18 $27.16 $27.00 0.6 9.2% -0.6%
Forward Air Corp. FWRD 01/11/18 $60.50 $60.94 2.7 9.2% +0.7%
SPDR S&P 500 ETF SPY 01/10/18 $273.76 $281.96 2.9 27.6% +3.0%
SPDR S&P 500 ETF SPY 12/08/17 $265.44 $281.96 7.6 29.0% +6.2%
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.

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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