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: +55.0% for the 60 months ending May 10, 2018 (vs. +83.6% for the S&P)
For complete performance data, click here
Vol.16 #109 Friday, May 11, 2018 10:02AM EDT

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

Market Stance: BULLISH (since April 10, 2018)

Contents

Typical Client Performance
Bought Green Dot Corp. (GDOT)
Sold SPDR S&P 500 ETF (SPY) +3.0%
Typical Client Portfolio
Subscription Information
Privacy Policy
Disclaimers
Contact Us

Typical Client Performance

Deen Capital S&P 500
Year-to-date as of May 10, 2018 +1.0% * +2.5%
12 months (May 10, 2017 to May 10, 2018) +9.7% * +15.6%
24 months (May 10, 2016 to May 10, 2018) +45.3% * +35.7%
36 months (May 10, 2015 to May 10, 2018) +28.6% * +36.4%
48 months (May 10, 2014 to May 10, 2018) +40.3% * +56.6%
60 months (May 10, 2013 to May 10, 2018) +54.6% * +83.6%

* 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 Green Dot Corp. (GDOT)

Initial percent of portfolio (approx.)6.1%
Net buy price in managed accounts*$72.08
Most recent close (May 10)$72.57
Net change (based on net buy price)-0.49
Today's volume as of 10:20AM EDT71,138 ($5.1 million)
Average daily volume341,200 ($24.6 million)
This year's earnings-per-share$2.87 (est)
Next year's earnings-per-share$3.26 (est)
P/E using next year's earnings22.1 (est)
Earnings growth rate, next 5 years30% per year (est)

* Buy prices shown are net after commissions and fees.

Today, Friday, May 11, 2018, I bought GDOT, for both client and my personal accounts.

Here's why I bought this stock:

+ Earnings surprise: Two days ago, Wednesday, May 9, the company announced results for the quarter ended March 31. Earnings came in at $1.40 per diluted share (vs $1.00 last year and analysts' consensus $1.29). Revenue was up 25% to $315.0 million (analysts' consensus $297.4 million).

+ A "true surprise"*: For more than two months prior to the news, the stock was trading mostly sideways or edging lower. Then, yesterday, it jumped +14.6% 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 11-week range to a new all-time high.

+ Volume spike, mostly on the buy side: Yesterday's volume was more than 4x average, and set a 12-month record.

+ The stock is down slightly this morning. 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: +28%, +31%, +31%, and, most recently, as cited above, +25%.

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

Jun 17 vs Jun 16: $0.55 vs $0.27
Sep 17 vs Sep 16: $0.34 vs $0.21
Dec 17 vs Dec 16: $0.29 vs $0.19
Mar 18 vs Mar 17: $1.40 vs $1.00

+ Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2018 is $2.87, revised upward from $2.59 90 days ago (and up from 2017 actual earnings of $2.16); and the consensus estimate for 2019 is $3.26, revised upward from $2.97 90 days ago.

+ Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 30%, 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 4c above estimates in each of the past seven quarters, including the just-reported quarter cited above, which "beat the Street" by 11c.

+ 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 ("Finance - Credit Card / Payment Processing") is ranked #50 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, Friday, May 11, 2018

Sold SPDR S&P 500 ETF (SPY) +3.0%

Net sell price in managed accounts*$272.10
Date(s) boughtApr 10 2018
Net buy price in managed accounts*$264.27
Holding period4.4 weeks
Gain/loss in managed accounts*+3.0% (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, Friday, May 11, 2018, I sold SPY, for both client and my personal accounts.

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

-KD, Friday, May 11, 2018

Typical Client Portfolio

Company Name Stock
Symbol
Buy
Date
NetBuy
Price*
Current
Price**
Weeks
Held
% of
Portfolio
Gain
(Loss)
Green Dot Corp. GDOT 05/11/18 $72.08 $72.57 0.0 6.1% +0.7%
Sunrun Inc. RUN 05/10/18 $11.54 $10.82 0.1 5.5% -6.2%
Diodes Inc. DIOD 05/10/18 $32.94 $32.95 0.1 5.0% +0.0%
Zebra Technologies Corp. ZBRA 05/09/18 $153.86 $153.79 0.3 5.0% -0.0%
Xcerra Corp. XCRA 05/09/18 $13.35 $13.74 0.3 5.0% +2.9%
Penn Virgina Corp. PVAC 05/09/18 $62.06 $61.78 0.3 4.9% -0.4%
Expeditors International EXPD 05/09/18 $70.12 $72.44 0.3 4.8% +3.3%
Stoneridge Inc. SRI 05/08/18 $27.89 $29.28 0.4 5.2% +5.0%
iShares Core S&P 500 IVV 05/08/18 $267.81 $274.59 0.4 4.9% +2.5%
Nanometrics Inc. NANO 05/07/18 $35.55 $37.34 0.6 5.2% +5.1%
Malibu Boats, Inc. MBUU 05/03/18 $40.74 $42.40 1.1 5.1% +4.1%
Centene Corp. CNC 05/03/18 $114.88 $114.59 1.1 4.8% -0.2%
Enova International, Inc. ENVA 05/01/18 $28.90 $32.35 1.4 5.5% +11.9%
DMC Global, Inc. BOOM 04/27/18 $39.54 $39.80 2.0 5.0% +0.7%
SPDR S&P 500 ETF SPY 04/25/18 $262.51 $272.67 2.3 11.7% +3.9%
SPDR S&P 500 ETF SPY 04/10/18 $264.27 $272.67 4.4 16.3% +3.2%
Cash 0.1%  
Total 100%  

* Buy prices shown are net after commissions.

** Current prices are at least 20 minutes old.

Subscription Information

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 deenslist@deencapital.com. 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.

Privacy Policy

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.

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.

Contact Us

The Deen's List
PO Box 30925
Santa Barbara, CA 93130
(800) 353-4990
deenslist@deencapital.com

Copyright © 2018 Deen Capital Management, Inc.