The Deen's ListTM
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Our goal: Outperform the S&P 500 in both up markets and down.
Our result: +55.5% for the 60 months ending May 9, 2018 (vs. +82.6% for the S&P)
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Vol.16 #107 Thursday, May 10, 2018 12:32PM EDT

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Market Stance: BULLISH (since April 10, 2018)


Typical Client Performance
Bought Diodes Inc. (DIOD)
Sold SPDR S&P 500 ETF (SPY) +2.8%
Typical Client Portfolio
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Typical Client Performance

Deen Capital S&P 500
Year-to-date as of May 9, 2018 +0.1% * +1.5%
12 months (May 9, 2017 to May 9, 2018) +10.8% * +14.6%
24 months (May 9, 2016 to May 9, 2018) +46.7% * +36.1%
36 months (May 9, 2015 to May 9, 2018) +28.8% * +35.1%
48 months (May 9, 2014 to May 9, 2018) +40.6% * +55.1%
60 months (May 9, 2013 to May 9, 2018) +56.9% * +82.6%

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

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Bought Diodes Inc. (DIOD)

Initial percent of portfolio (approx.)5.0%
Net buy price in managed accounts*$32.94
Most recent close (May 09)$33.44
Net change (based on net buy price)-0.50
Today's volume as of 12:33PM EDT128,121 ($4.2 million)
Average daily volume301,900 ($9.9 million)
This year's earnings-per-share$1.90 (est)
Next year's earnings-per-share$2.16 (est)
P/E using next year's earnings15.2 (est)
Earnings growth rate, next 5 years15% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Thursday, May 10, 2018, I bought DIOD, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: Two days ago, Tuesday, after the close, the company announced results for the quarter ended March 31. Earnings came in at 48c per diluted share (vs 14c last year and analysts' consensus 40c). Revenue was up 16% to $274.5 million (analysts' consensus $269.5 million).

+ A "true surprise"*: Prior to the news, the stock was trading toward the low end of its 2-month range. Then, yesterday, it jumped +10.9% on 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: The price jump yesterday represents a breakout from a 7-week range to a new 6-month high.

+ Volume spike, mostly on the buy side: Yesterday's volume was more than 3x average, and set an 11-month record.

+ This morning, the stock is down a bit on profit taking. I 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: +12%, +14%, +16%, and, most recently, as cited above, +16%.

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

Jun 17 vs Jun 16: 36c vs 20c
Sep 17 vs Sep 16: 45c vs 30c
Dec 17 vs Dec 16: 42c vs 15c
Mar 18 vs Mar 17: 48c vs 14c

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $1.90, revised upward from $1.73 90 days ago (and up from 2017 actual earnings of $1.37); and the consensus estimate for 2019 is $2.16, revised upward from $1.94 90 days ago.

+ Valuation: At 15.2 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock may still be, even after yesterday's price jump, attractively priced.

+ History of earnings surprises: This company "beat the Street" by 8c this latest quarter ended March 31, and also by 3c in the prior quarter ended Dec 31.

+ The company's industry group ("Elec - Semiconductor Mfg") is ranked #113 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 10, 2018

Sold SPDR S&P 500 ETF (SPY) +2.8%

Net sell price in managed accounts*$271.72
Date(s) boughtApr 10 2018
Net buy price in managed accounts*$264.27
Holding period4.3 weeks
Gain/loss in managed accounts*+2.8% (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 10, 2018, I sold SPY, for both client and my personal accounts.

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

-KD, Thursday, May 10, 2018

Typical Client Portfolio

Company Name Stock
% of
Diodes Inc. DIOD 05/10/18 $32.94 $32.84 0.0 5.0% -0.3%
Zebra Technologies Corp. ZBRA 05/09/18 $153.86 $153.68 0.1 5.0% -0.1%
Xcerra Corp. XCRA 05/09/18 $13.35 $13.47 0.1 4.9% +0.9%
Penn Virgina Corp. PVAC 05/09/18 $62.06 $62.25 0.1 5.0% +0.3%
Expeditors International EXPD 05/09/18 $70.12 $71.05 0.1 4.7% +1.3%
Stoneridge Inc. SRI 05/08/18 $27.89 $28.90 0.3 5.1% +3.6%
iShares Core S&P 500 IVV 05/08/18 $267.81 $273.56 0.3 4.8% +2.1%
Nanometrics Inc. NANO 05/07/18 $35.55 $36.42 0.4 5.1% +2.5%
Malibu Boats, Inc. MBUU 05/03/18 $40.74 $41.81 1.0 5.0% +2.6%
Centene Corp. CNC 05/03/18 $114.88 $113.39 1.0 4.8% -1.3%
Enova International, Inc. ENVA 05/01/18 $28.90 $32.92 1.3 5.5% +13.9%
DMC Global, Inc. BOOM 04/27/18 $39.54 $41.75 1.9 5.3% +5.6%
SPDR S&P 500 ETF SPY 04/25/18 $262.51 $271.69 2.1 11.7% +3.5%
SPDR S&P 500 ETF SPY 04/10/18 $264.27 $271.69 4.3 28.2% +2.8%
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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