*** ANNOUNCEMENT: The free trial period was recently extended through April 30. Ken Deen's THE AGGRESSIVE TRADER(tm) "Seeking double-digit profits in one to four months" ALERT Vol. 2, No. 50 P.O. Box 4791 March 24, 1993 Santa Barbara, CA 93140 10:00am New York Time CompuServe: 72020,2050 (805) 565-2039 Internet: 72020.2050@compuserve.com Market Stance: Neutral *** ALERT ITEMS: *** Marginable Account (editor's personal account): * BUY 150 HS Resources (NASDAQ: HSRS) EPS:94, RS:82, GR:79->56, PE:27, Oil&Gas-US Exploration and Production Today I bought 150 shares at 20 3/4. This $3,141 purchase represents 8.0% of the account value. After this trade, the account value is $39,318. Of that, $18,098 is long stocks and $21,221 is cash. IRA Account (editor's personal account): * BUY 150 HS Resources (NASDAQ: HSRS) EPS:94, RS:82, GR:79->56, PE:39, Oil&Gas-US Exploration and Production Today I bought 150 shares at 20 3/4. This $3,141 purchase represents 7.3% of the account value. After this trade, the account value is $42,856. Of that, $22,241 is long stocks and $20,615 is cash. DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals (computer-generated): None *** TRADING IDEA ITEMS (There will be no followup on these ideas): *** DESI(tm) Buy Candidates (The following stock(s) are "day 2" DESI(tm) buy candidates. See Monthly Status Report ("What Is the DESI(tm) System?") for explanation. The DESI(tm) market barometer for day 2 is red.): * Johnson Products Co. (AMEX: JPC, $43.25) EPS:99, RS:95, GR:93->115, PE:12, Cosmetics and Toiletries Comment: I don't like this earnings surprise as well as HS Resources for several reasons. First, the cosmetics and toiletries group is declining in strength while the energy sector, and oil and gas exploration in particular, is on the rise. Second, HSRS shows stronger sales and earnings acceleration than JPC. Third, HSRS' PE fell by a much larger percentage than JPC. Publication Delay Although I started writing this Alert at 10:00am New York time, I was not able to send it out until 4:00pm New York time. A two to three hour delay is typical; today's longer delay was due to difficulties in obtaining quarterly sales and earnings numbers. HS Resources Although my market stance is still neutral, I am bullish on the energy sector. The "Oil&Gas - US Exploration and Production" group has climbed from 115th place on Jan. 20 to 56th place (out of 199) today, based on price performance over the past six months. HS Resources is a new issue, having gone public last November at $14 a share. Here are the sales and earnings numbers over the last four quarters: Quarter Ended Sales($mil) Earnings-per-share --------- ---------------- ------------------- Mar 31 92 4.4 vs 3.0 +46% 0.07 vs -0.02 +0.09 Jun 30 92 6.8 vs 2.9 +138% 0.10 vs 0.02 +0.08 Sep 30 92 7.4 vs 3.0 +148% 0.29 vs 0.00 +0.29 Dec 31 92 8.9 vs 4.2 +111% 0.31 vs 0.06 +0.25 As can be seen from these numbers, sales and earnings growth has been rapid and generally acclerating in recent quarters. The relative strength rank, at 82, deserves comment. As an absolute number, this is not very meaningful because the stock is a new issue, and this ranking compares stocks on the basis of 12-month price performance. However, the RS rank is on the rise -- a bullish sign. The P/E, at 27, is very modest compared to the recent growth rate. In the wake of the recent earnings news, on March 18, the P/E dropped from 38 to 27, even as the stock price was bid up 1 1/4 points to 21 on more than twice normal volume. One negative is that the stock is very overbought. It has climbed non-stop from $14 a share to current levels over the past six weeks. There may possibly be a dip in price sometime over the next two or three weeks to below current levels. Should such a price dip occur, I may use it to accumulate more shares. (If I do, I will publish another Alert.) HS Resources, located in San Francisco, is an independent oil and gas company operating in the Wattenberg field area of the Denver-Julesberg basin. All rankings in today's alert (earnings-per-share, relative strength, and group relative strength) are from Investor's Business Daily. ---------------------------------------------------------------------------- Previous Alert: Vol.2 #41 (March 5, 1993) ---------------------------------------------------------------------------- SUBSCRIPTION INFORMATION This issue of The Aggressive Trader(tm) may be copied and distributed freely. Please pass it around! Beginning May 1, 1993, The Aggressive Trader(tm) will be available only by full-price subscription. Until that date, trial e-mail, fax, and first-class mail subscriptions are available for only the cost of printing and mailing (e-mail via Internet is free). Monthly Status Reports (available in printed form only) are an essential adjunct to these timely bulletins. Among other things, they review the stock holdings and historical performance of each newsletter account. To receive a free sample Monthly Status Report plus an at-cost subscription form, just send your paper mail address. These timely notices come in two flavors: "Alerts" (more important) and "Trading Ideas" (less important). You may elect to receive Alerts only, or both Alerts and Trading Ideas. ---------------------------------------------------------------------------- The Aggressive Trader is edited and published at irregular intervals, but at least monthly, by Deen Capital Management, Inc., P.O. Box 4791, Santa Barbara, California 93140, (805) 565-2039. Deen Capital Management, Inc., its principals, employees, affiliates, and/or clients may have positions in securities recommended herein and may make additional purchases and/or sales in these securities. Recommendations made in this publication involve a high degree of risk and may result in losses. Readers should not assume that recommendations will be profitable or will equal past performance. The information in this publication is collected from sources believed to be reliable, but neither the accuracy nor the completeness of this information is guaranteed. The Aggressive Trader, Deen Earnings Surprise Index, DESI, and DESI-3 are all trademarks of Deen Capital Management, Inc. Copyright (c) 1993 Deen Capital Management, Inc. -END-