Please read carefully our disclaimers at the end of this newsletter.
Market Stance: BULLISH (since March 20, 2018)
* An average of managed accounts, net after all commissions and fees.
Click here for more performance data.
Click here for information on managed accounts.
* Buy prices shown are net after commissions and fees.
Today, Wednesday, March 21, 2018, I bought SRI, for both client and my personal accounts.
Here's why I bought this stock:
+ Breakout: Yesterday, the stock was up sharply on heavy volume, breaking out of a 2-month range to a new all-time high.
+ Volume spike, mostly on the buy side: Yesterday's volume was more than 8x average, and set a 12-month record.
+ This morning, the stock price was down just slightly. I chose to view this as a buying opportunity.
+ Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +26%, +12%, +17%, and, most recently, for the quarter ended Dec 31, +20% to $207.4 million.
+ Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Mar 17 vs Mar 16: 38c vs 31c Jun 17 vs Jun 16: 42c vs 41c Sep 17 vs Sep 16: 36c vs 36c Dec 17 vs Dec 16: 42c vs 34c
+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.01, revised upward from $1.54 90 days ago (and up from 2017 actual earnings of $1.57); and the consensus estimate for 2019 is $2.16, revised upward from $1.65 90 days ago.
+ History of earnings surprises: This company has reported earnings-per-share at least 3c above estimates in each of the past five quarters. Most recently, for the quarter ended Dec 31, they "beat the Street" by 3c.
+ The company's industry group ("Electronic - Parts") is ranked #75 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.
I chose to buy the stock in spite of the following negative factor:
- Valuation: At 13 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 0.3%, the stock is, by my usual metric, overpriced. (But I have a suspicion that that projected growth rate may be too low.)
-KD, Wednesday, March 21, 2018
* 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, Wednesday, March 21, 2018, I sold SPY, for both client and my personal accounts.
I sold just enough SPY to pay for SRI. We remain fully invested.
-KD, Wednesday, March 21, 2018
* Buy prices shown are net after commissions.
** Current prices are at least 20 minutes old.
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 firstname.lastname@example.org. 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.
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.
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.
The Deen's List
Copyright © 2018 Deen Capital Management, Inc.