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: +55.5% for the 60 months ending May 2, 2018 (vs. +81.8% for the S&P)
For complete performance data, click here
Vol.16 #95 Thursday, May 3, 2018 10:09AM EDT

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

Market Stance: BULLISH (since April 10, 2018)

Contents

Typical Client Performance
Bought Centene Corp. (CNC)
Bought Malibu Boats, Inc. (MBUU)
Sold iShares Core S&P 500 (IVV) -0.3%
Sold SPDR S&P 500 ETF (SPY) -1.1%
Typical Client Portfolio
Subscription Information
Privacy Policy
Disclaimers
Contact Us

Typical Client Performance

Deen Capital S&P 500
Year-to-date as of May 2, 2018 -2.0% * -0.9%
12 months (May 2, 2017 to May 2, 2018) +8.0% * +12.3%
24 months (May 2, 2016 to May 2, 2018) +38.7% * +31.6%
36 months (May 2, 2015 to May 2, 2018) +23.0% * +32.6%
48 months (May 2, 2014 to May 2, 2018) +32.8% * +51.4%
60 months (May 2, 2013 to May 2, 2018) +54.1% * +81.8%

* 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 Centene Corp. (CNC)

Initial percent of portfolio (approx.)5.0%
Net buy price in managed accounts*$114.88
Most recent close (May 02)$114.24
Net change (based on net buy price)+0.64
Today's volume as of 10:37AM EDT803,922 ($92.4 million)
Average daily volume1.4 million ($159.9 million)
This year's earnings-per-share$7.03 (est)
Next year's earnings-per-share$8.18 (est)
P/E using next year's earnings14.0 (est)
Earnings growth rate, next 5 years17% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Thursday, May 3, 2018, I bought CNC, for both client and my personal accounts.

This stock is a component of the S&P 500.

Here's why I bought this stock:

+ Breakout: The stock was up sharply yesterday, breaking out of a 14-week range to a new all-time high.`

+ Volume spike, mostly on the buy side: Yesterday's volume was huge - about 11 times average - and more than doubled the previous 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: +10%, +10%, +8%, and, most recently, for the quarter ended March 31, +13% to $13.2 million.

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

Jun 17 vs Jun 16: $1.59 vs $1.29
Sep 17 vs Sep 16: $1.35 vs $1.12
Dec 17 vs Dec 16: $0.97 vs $1.19
Mar 18 vs Mar 17: $2.17 vs $1.12

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $7.03, revised upward from $6.11 90 days ago (and up from 2017 actual earnings of $5.03); and the consensus estimate for 2019 is $8.18, revised upward from $6.98 90 days ago.

+ Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 17%, the stock may still be, even after yesterday's price jump, attractively priced.

+ History of earnings surprises: This company has reported earnings-per-share at least 6c above estimates in each of the past six quarters. Most recently, for the quarter ended March 31, they "beat the Street" by 24c.

+ 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 ("Medical - Managed Care") is ranked #89 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, May 3, 2018

Bought Malibu Boats, Inc. (MBUU)

Initial percent of portfolio (approx.)4.8%
Net buy price in managed accounts*$40.75
Most recent close (May 02)$40.36
Net change (based on net buy price)+0.39
Today's volume as of 10:36AM EDT144,638 ($5.9 million)
Average daily volume183,900 ($7.5 million)
This year's earnings-per-share$2.23 (est)
Next year's earnings-per-share$2.60 (est)
P/E using next year's earnings15.7 (est)
Earnings growth rate, next 5 years15% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Thursday, May 3, 2018, I bought MBUU, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: For the quarter ended March 31, earnings came in at 89c per diluted share (vs 49c last year and analysts' consensus 70c). Revenue was up 82% to $140.4 million (analysts' consensus $125.9 million).

+ A "true surprise"*: For several weeks prior to the news, the stock was trading in a sideways pattern. Then, yesterday, it jumped +20% 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: Yesterday's price move represents a breakout from an 8-week range to a new all-time high.

+ Volume spike, mostly on the buy side: Yesterday's volume was about 6x average, and set an 8-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: +13%, +67%, +69%, and, most recently, as cited above, +82%.

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

Jun 17 vs Jun 16: 43c vs 38c
Sep 17 vs Sep 16: 42c vs 26c
Dec 17 vs Dec 16: 53c vs 38c
Mar 18 vs Mar 17: 89c vs 49c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 18 (ends June 30) is $2.23, revised upward from $2.02 90 days ago (and up from FY 17 actual earnings of $1.56); and the consensus estimate for FY 19 is $2.60, revised upward from $2.26 90 days ago.

+ Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is, by my usual metric, attractively priced.

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

+ The company's industry group ("Leisure - Products") is ranked #120 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, Thursday, May 3, 2018

Sold iShares Core S&P 500 (IVV) -0.3%

Net sell price in managed accounts*$263.91
Date(s) boughtMay 1 2018
Net buy price in managed accounts*$264.77
Holding period0.3 weeks
Gain/loss in managed accounts*-0.3% (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, May 3, 2018, I sold IVV, for both client and my personal accounts.

I sold IVV and some of our SPY in order to pay for MBUU and CNC. We remain fully invested.

-KD, Thursday, May 3, 2018

Sold SPDR S&P 500 ETF (SPY) -1.1%

Net sell price in managed accounts*$261.28
Date(s) boughtApr 10 2018
Net buy price in managed accounts*$264.27
Holding period3.3 weeks
Gain/loss in managed accounts*-1.1% (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, May 3, 2018, I sold SPY, for both client and my personal accounts.

I sold IVV and some of our SPY in order to pay for MBUU and CNC. We remain fully invested.

-KD, Thursday, May 3, 2018

Typical Client Portfolio

Company Name Stock
Symbol
Buy
Date
NetBuy
Price*
Current
Price**
Weeks
Held
% of
Portfolio
Gain
(Loss)
Malibu Boats, Inc. MBUU 05/03/18 $40.75 $41.04 0.0 5.1% +0.7%
Centene Corp. CNC 05/03/18 $114.88 $115.75 0.0 5.1% +0.8%
Enova International, Inc. ENVA 05/01/18 $28.90 $29.40 0.3 5.1% +1.7%
Solaris Oilfield Infrastruct SOI 04/30/18 $19.11 $18.56 0.4 5.0% -2.9%
DMC Global, Inc. BOOM 04/27/18 $39.54 $37.95 0.9 5.0% -4.0%
SPDR S&P 500 ETF SPY 04/25/18 $262.51 $260.85 1.1 11.7% -0.6%
SPDR S&P 500 ETF SPY 04/10/18 $264.27 $260.85 3.3 63.0% -1.3%
Cash 0.0%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

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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.

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