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 #106 Wednesday, May 9, 2018 4:15PM EDT

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Market Stance: BULLISH (since April 10, 2018)


Typical Client Performance
Bought Penn Virgina Corp. (PVAC)
Sold SPDR S&P 500 ETF (SPY) +1.4%
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) +44.0% * +34.9%
36 months (May 8, 2015 to May 8, 2018) +26.5% * +33.8%
48 months (May 8, 2014 to May 8, 2018) +38.6% * +53.9%
60 months (May 8, 2013 to May 8, 2018) +54.2% * +80.2%

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

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Bought Penn Virgina Corp. (PVAC)

Initial percent of portfolio (approx.)5.0%
Net buy price in managed accounts*$62.06
Most recent close (May 08)$47.85
Net change (based on net buy price)+14.21
Today's volume as of 4:00PM EDT714,460 ($44.3 million)
Average daily volume147,600 ($9.2 million)
This year's earnings-per-share$6.86 (est)
Next year's earnings-per-share$9.87 (est)
P/E using next year's earnings6.3 (est)
Earnings growth rate, next 5 years10% per year (est)

* Buy prices shown are net after commissions and fees.

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

Here's why I bought this stock:

+ Earnings surprise: Yesterday, May 8, after the close, the company announced results for the quarter ended March 31. Earnings came in at $1.48 per diluted share (vs $0.59 last year and analysts' consensus $1.01). Revenue was up 121% to $77.2 million (analysts' consensus $66.7 million).

+ A "true surprise"*: For three weeks prior to the news, the stock was trading in a tight range. Today, it is soaring, up +31% as I write this, 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: Today's price move represents a breakout from a 16-month range to a new all-time high

+ Volume spike, mostly on the buy side: Today's volume is more than 4x average, and sets a 10-month record.

+ Three months of accelerating sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: -2%, +4%, +66%, and, most recently, as cited above, +121%.

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

Jun 17 vs Jun 16: $0.66 vs ($3.99)
Sep 17 vs Sep 16: $0.57 vs  $0.09
Dec 17 vs Dec 16: $1.06 vs  $0.71
Mar 18 vs Mar 17: $1.48 vs  $0.59

+ Valuation: At 6.3 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 10%, the stock may still be, even after today's price jump, attractively priced.

+ History of earnings surprises: This company has reported earnings-per-share at least 7c above estimates in each of the past five quarters, including the just-reported quarter cited above, which "beat the Street" by 59c.

+ The company's industry group ("Oil & Gas - US Exploration & Production") is ranked #8 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:

- Strong but falling earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $6.86, revised downward from $7.48 90 days ago (but up from 2017 actual earnings of $2.88); and the consensus estimate for 2019 is $9.87, revised downward from $10.67 90 days ago.

-KD, Wednesday, May 9, 2018

Sold SPDR S&P 500 ETF (SPY) +1.4%

Net sell price in managed accounts*$268.10
Date(s) boughtApr 10 2018
Net buy price in managed accounts*$264.27
Holding period4.1 weeks
Gain/loss in managed accounts*+1.4% (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, Wednesday, May 9, 2018, I sold SPY, for both client and my personal accounts.

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

-KD, Wednesday, May 9, 2018

Typical Client Portfolio

Company Name Stock
% of
Zebra Technologies Corp. ZBRA 05/09/18 $153.86 $149.57 0.0 4.9% -2.8%
Xcerra Corp. XCRA 05/09/18 $13.35 $13.32 0.0 4.8% -0.2%
Penn Virgina Corp. PVAC 05/09/18 $62.06 $61.65 0.0 5.0% -0.7%
Expeditors International EXPD 05/09/18 $70.12 $70.54 0.0 4.7% +0.6%
Stoneridge Inc. SRI 05/08/18 $27.89 $28.93 0.1 5.2% +3.7%
iShares Core S&P 500 IVV 05/08/18 $267.81 $271.15 0.1 4.8% +1.2%
Nanometrics Inc. NANO 05/07/18 $35.55 $36.31 0.3 5.1% +2.2%
Malibu Boats, Inc. MBUU 05/03/18 $40.74 $41.12 0.9 5.0% +0.9%
Centene Corp. CNC 05/03/18 $114.88 $112.63 0.9 4.8% -2.0%
Enova International, Inc. ENVA 05/01/18 $28.90 $32.17 1.1 5.5% +11.3%
DMC Global, Inc. BOOM 04/27/18 $39.54 $41.90 1.7 5.3% +6.0%
SPDR S&P 500 ETF SPY 04/25/18 $262.51 $269.30 2.0 11.7% +2.6%
SPDR S&P 500 ETF SPY 04/10/18 $264.27 $269.30 4.1 33.1% +1.9%
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.

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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