The Deen's ListTM
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Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +66.8% for the 60 months ending February 21, 2018 (vs. +98.1% for the S&P)
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Vol.16 #32 Thursday, February 22, 2018 12:18PM EST

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Market Stance: BEARISH (since February 2, 2018)


Typical Client Performance
Bought Vishay Precision Group, Inc. (VPG)
Sold SPDR S&P 500 ETF (SPY) -0.4%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of February 21, 2018 +1.3% * +1.3%
12 months (Feb 21, 2017 to Feb 21, 2018) +14.7% * +16.3%
24 months (Feb 21, 2016 to Feb 21, 2018) +50.0% * +46.4%
36 months (Feb 21, 2015 to Feb 21, 2018) +31.3% * +35.7%
48 months (Feb 21, 2014 to Feb 21, 2018) +31.8% * +59.0%
60 months (Feb 21, 2013 to Feb 21, 2018) +68.5% * +98.1%

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

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Bought Vishay Precision Group, Inc. (VPG)

Initial percent of portfolio (approx.)5.0%
Net buy price in managed accounts*$29.52
Most recent close (Feb 21)$27.80
Net change (based on net buy price)+1.72
Today's volume as of 12:18PM EST95,554 ($2.8 million)
Average daily volume52,300 ($1.5 million)
This year's earnings-per-share$1.30 (est)
Next year's earnings-per-share$1.56 (est)
P/E using next year's earnings18.9 (est)
Earnings growth rate, next 5 years16% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Thursday, February 22, 2018, I bought VPG, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: Yesterday, before the open, the company announced results for the quarter ended Dec 31. Earnings came in at 50c per diluted share (vs 26c last year and analysts' consensus 31c). Revenue was up 24% to $69.4 million (analysts' consensus $63.9 million).

+ A "true surprise"*: Prior to the news, the stock was trading near the low end of its 3-month range. Then, yesterday, it jumped +11.9% on extremely 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: This morning, the stock is up again, now breaking out of a 3-month range to a new all-time high

+ Volume spike, mostly on the buy side: Yesterday's volume was more than 4 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: +6%, +7%, +15%, and, most recently, as cited above, +24%.

+ 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
Jun 17 vs Jun 16: 29c vs 15c
Sep 17 vs Sep 16: 27c vs 21c
Dec 17 vs Dec 16: 50c vs 26c

+ Strong rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $1.30, unchanged from 90 days ago (and up from 2017 actual earnings of $1.25); and the consensus estimate for 2019 is $1.56, unchanged from 90 days ago.

Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 16%, the stock is, by my usual metric, priced within reason.

+ History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past three quarters, including the just-reported quarter cited above, which "beat the Street" by 19c.

+ 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 - Scientific/Msrng") is ranked #90 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, February 22, 2018

Sold SPDR S&P 500 ETF (SPY) -0.4%

Net sell price in managed accounts*$272.41
Date(s) boughtFeb 21 2018
Net buy price in managed accounts*$273.50
Holding period0.1 weeks
Gain/loss in managed accounts*-0.4% (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, Thursday, February 22, 2018, I sold SPY, for both client and my personal accounts.

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

-KD, Thursday, February 22, 2018

Typical Client Portfolio

Company Name Stock
% of
Vishay Precision Group, Inc. VPG 02/22/18 $29.52 $29.60 0.0 5.1% +0.3%
SPDR S&P 500 ETF SPY 02/21/18 $273.50 $272.74 0.1 89.5% -0.3%
SolarEdge Technologies, Inc. SEDG 02/15/18 $44.80 $48.23 1.0 5.4% +7.6%
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.

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