The Deen's ListTM
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Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +54.2% for the 60 months ending May 8, 2018 (vs. +80.2% for the S&P)
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Vol.16 #104 Wednesday, May 9, 2018 10:54AM EDT

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Market Stance: BULLISH (since April 10, 2018)


Typical Client Performance
Bought Expeditors International (EXPD)
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of May 8, 2018 -0.8% * +0.5%
12 months (May 8, 2017 to May 8, 2018) +10.3% * +13.4%
24 months (May 8, 2016 to May 8, 2018) +43.9% * +34.9%
36 months (May 8, 2015 to May 8, 2018) +26.4% * +33.8%
48 months (May 8, 2014 to May 8, 2018) +38.5% * +53.9%
60 months (May 8, 2013 to May 8, 2018) +54.1% * +80.2%

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

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Bought Expeditors International (EXPD)

Initial percent of portfolio (approx.)4.7%
Net buy price in managed accounts*$70.12
Most recent close (May 08)$69.58
Net change (based on net buy price)+0.54
Today's volume as of 11:11AM EDT898,562 ($63.0 million)
Average daily volume1.2 million ($81.3 million)
This year's earnings-per-share$2.92 (est)
Next year's earnings-per-share$3.15 (est)
P/E using next year's earnings22.3 (est)
Earnings growth rate, next 5 years9% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Wednesday, May 9, 2018, I bought EXPD, for both client and my personal accounts.

This stock is a component of the S&P 500 and also the Dow Jones Transportation Average.

Here's why I bought this stock:

+ Earnings surprise: Yesterday, May 8, before the open, the company announced results for the quarter ended March 31. Earnings came in at 77c per diluted share (vs 51c last year and analysts' consensus 65c). Revenue was up 20% to $1.85 billion (analysts' consensus $1.72 billion).

+ A "true surprise"*: For three months prior to the news, the stock was mostly trading in a tight range in the low 60s. Then, yesterday, it jumped +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: Yesterday's price move represents a breakout from a 15-week range to a new 30-year high.

+ Volume spike, mostly on the buy side: Yesterday's volume was about 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: +13%, +15%, +16%, and, most recently, as cited above, +20%.

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

Jun 17 vs Jun 16: 60c vs 63c
Sep 17 vs Sep 16: 66c vs 59c
Dec 17 vs Dec 16: 71c vs 61c
Mar 18 vs Mar 17: 77c vs 51c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.92, revised upward from $2.80 90 days ago (and up from 2017 actual earnings of $2.48); and the consensus estimate for 2019 is $3.15, revised upward from $3.13 90 days ago.

+ History of earnings surprises: This company has reported earnings-per-share at least a penny above estimates in each of the past four quarters, including the just-reported quarter cited above, which "beat the Street" by 12c.

+ The company's industry group ("Transportation - Logistics") is ranked #46 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 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 9%, the stock is, by my usual metric, expensive. (But I suspect that that growth projection may be low.)

-KD, Wednesday, May 9, 2018

Typical Client Portfolio

Company Name Stock
% of
Zebra Technologies Corp. ZBRA 05/09/18 $153.86 $150.66 0.0 5.0% -2.1%
Expeditors International EXPD 05/09/18 $70.12 $70.17 0.0 4.7% +0.1%
Stoneridge Inc. SRI 05/08/18 $27.89 $28.75 0.1 5.2% +3.1%
iShares Core S&P 500 IVV 05/08/18 $267.81 $269.40 0.1 4.8% +0.6%
Nanometrics Inc. NANO 05/07/18 $35.55 $35.90 0.3 5.1% +1.0%
Malibu Boats, Inc. MBUU 05/03/18 $40.74 $41.10 0.9 5.0% +0.9%
Centene Corp. CNC 05/03/18 $114.88 $111.52 0.9 4.8% -2.9%
Enova International, Inc. ENVA 05/01/18 $28.90 $31.28 1.1 5.4% +8.2%
DMC Global, Inc. BOOM 04/27/18 $39.54 $39.20 1.7 5.0% -0.9%
SPDR S&P 500 ETF SPY 04/25/18 $262.51 $267.55 2.0 11.7% +1.9%
SPDR S&P 500 ETF SPY 04/10/18 $264.27 $267.55 4.1 43.2% +1.2%
Cash 0.0%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

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