The Deen's ListTM
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Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +71.7% for the 60 months ending March 12, 2018 (vs. +97.5% for the S&P)
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Vol.16 #48 Tuesday, March 13, 2018 10:56AM EDT

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Market Stance: BULLISH (since March 5, 2018)


Typical Client Performance
Bought NV5 Global, Inc. (NVEE)
Sold SPDR S&P 500 ETF (SPY) +4.7%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of March 12, 2018 +6.7% * +4.5%
12 months (Mar 12, 2017 to Mar 12, 2018) +21.1% * +19.5%
24 months (Mar 12, 2016 to Mar 12, 2018) +54.0% * +43.0%
36 months (Mar 12, 2015 to Mar 12, 2018) +37.3% * +42.8%
48 months (Mar 12, 2014 to Mar 12, 2018) +40.6% * +61.0%
60 months (Mar 12, 2013 to Mar 12, 2018) +72.8% * +97.5%

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

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Bought NV5 Global, Inc. (NVEE)

Initial percent of portfolio (approx.)5.1%
Net buy price in managed accounts*$55.05
Most recent close (Mar 12)$54.05
Net change (based on net buy price)+1.00
Today's volume as of 11:07AM EDT36,700 ($2.0 million)
Average daily volume66,400 ($3.7 million)
This year's earnings-per-share$2.96 (est)
Next year's earnings-per-share$3.60 (est)
P/E using next year's earnings15.3 (est)
Earnings growth rate, next 5 years20% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Tuesday, March 13, 2018, I bought NVEE, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: Last Thursday, March 8, after the close, the company announced results for the quarter ended Dec 31. Earnings came in at 71c per diluted share (vs 41c last year and analysts' consensus 63c). Revenue was up 49% to $94.0 million.

+ Market reaction: The next day, Friday, the stock price jumped 18.6% on extremely heavy volume.

+ Volume spike, mostly on the buy side: Friday's volume was more than 4x average, and was a 12-month record.

+ This morning, the stock is up again, after some profit-taking yesterday. I view yesterday's dip as a buying opportunity. Our buy price today is slightly below Friday's close.

+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +43%, +50%, +52%, and, most recently, as cited above, +49%.

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

Mar 17 vs Mar 16: 39c vs 32c
Jun 17 vs Jun 16: 58c vs 38c
Sep 17 vs Sep 16: 75c vs 41c
Dec 17 vs Dec 16: 71c vs 41c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.96, revised upward from $2.81 90 days ago (and up from 2017 actual earnings of $2.41); and the consensus estimate for 2019 is $3.60, revised upward from $3.30 90 days ago.

+ Valuation: At 15 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock may still be, even after Friday's price jump, attractively priced.

+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 8c.

+ The company's industry group ("Commercial Services - Consulting") is ranked #97 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising over recent weeks and months.

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

-KD, Tuesday, March 13, 2018

Sold SPDR S&P 500 ETF (SPY) +4.7%

Net sell price in managed accounts*$279.19
Date(s) boughtMar 2 2018
Net buy price in managed accounts*$266.69
Holding period1.6 weeks
Gain/loss in managed accounts*+4.7% (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, March 13, 2018, I sold SPY, for both client and my personal accounts.

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

-KD, Tuesday, March 13, 2018

Typical Client Portfolio

Company Name Stock
% of
NV5 Global, Inc. NVEE 03/13/18 $55.05 $54.90 0.0 5.0% -0.3%
Medifast Inc. MED 03/07/18 $91.27 $88.70 0.9 5.2% -2.8%
Xcerra Corp. XCRA 03/05/18 $9.95 $11.25 1.1 5.5% +13.1%
Upland Software Inc. UPLD 03/05/18 $27.31 $29.32 1.1 5.2% +7.4%
SPDR S&P 500 ETF SPY 03/02/18 $266.69 $279.28 1.6 79.1% +4.7%
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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