Ken Deen's THE AGGRESSIVE TRADER(tm) "Seeking double-digit profits in one to four months" Vol. 2, No. 69 April 21, 1993 11:00am New York Time ********** Market Stance: Cautiously Bullish ********** ALERT ITEMS: Marginable Account (editor's personal account): * BUY International Colin Energy Corp. (AMEX: KCN). EPS:98, RS:90, GR:60->9, PE:21, Oil&Gas-Canadian Explo&Production Today I bought 300 shares at 17 1/8. This $5,172 purchase represents 14.4% of the account value. After this trade, the account value is $36,023. Of that, $34,203 is long stocks and $1,820 is cash. IRA Account (editor's personal account): * SELL 150 Home Fed Bancorp Indiana (NASDAQ: HOMF). Today I sold all 150 shares at 28. I had bought these shares Jan. 25 at 27 3/4 (Vol.2 #14). * BUY International Colin Energy Corp. (AMEX: KCN). EPS:98, RS:90, GR:60->9, PE:21, Oil&Gas-Canadian Explo&Production Today I bought 300 shares at 17 1/8. This $5,172 purchase represents 13.1% of the account value. After these trades, the account value is $39,592. Of that, $34,203 is long stocks and $5,390 is cash. DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals (computer-generated): None ********** TRADING IDEA ITEMS: (These are NOT buy recommendations. They are merely suggestions for your further research.) Breakouts (The following stock(s) have excellent sales and earnings growth, and have just broken out from a six-week or longer base.): * Biogen Inc. (NASDAQ: BGEN, $32.50) EPS:99, RS:35, GR:195->197, PE:23, Medical-Biomed/Genetics Comment: Outstanding earnings report yesterday. Medical stocks are starting to show some strength. If biomedical stocks continue to rally, Biogen will likely be a leader. Climactic Selloff/Rebounds (The following stock(s) have excellent sales and earnings growth, are in long-term uptrends, and have just had a climactic selloff-and-rebound.): * Justin Industries Inc. (NASDAQ: JSTN, $40.00) EPS:98, RS:81, GR:63->69, PE:19, Shoes & Related Apparel ********** Home Fed Bancorp Indiana Home Fed anounced quarterly earnings of 96 cents per share, versus 76 cents in the year-ago quarter. While a good gain, this number represents a deceleration in the recent growth rate. That deceleration is reason enough for me to sell. This is a DESI(tm) stock. I will have another Sell Alert on this stock when the computer-generated DESI(tm) sell signal comes in. The hypothetical DESI(tm) Account will wait for this DESI(tm) sell signal. With my own money, however, I sold all shares today. ********** International Colin Energy Corp. This is an enthusiastic recommendation! Yesterday, the company announced tremendous earnngs and sales, continuing a trend of rapid and accelerating growth. This outstanding news makes an already very attractive hot stock suddenly even more attractive. The stock has very high EPS and RS rankings of 98 and 90, respectively; the industry group is gaining favor dramatically; earnings and sales, again, are growing at a fast and accelerating clip; the stock is not overbought; the P/E has dropped from 27 on April 2 to 21 today; and the P/E is far below the growth rate. 21 times earnings is a very attractive valuation. Here are the last four quarters of sales and earnings growth: QtrEnd Sales($mil) Earnings-per-share ----- ------------------- ------------------ Jun92 3.7 vs 2.2 +64% 0.18 vs 0.15 +.03 Sep92 5.9 vs 2.2 +172% 0.15 vs 0.09 +.06 Dec92 8.5 vs 3.1 +174% 0.21 vs 0.13 +.08 Mar93 10.2 vs 3.0 +244% 0.26 vs 0.11 +.15 We are currently in an extremely choppy market. Many stocks are getting taken to the woodshed on the slightest pretext. Intel was but the most recent example. It is very difficult to make money in this market. Yet I remain cautiously bullish. The key, I believe, to making money in this market is group rotation. Int'l Colin is in the "Oil & Gas - Canadian Exploration & Production" group. This group is one of the darlings of the Street currently. The group ranking is 9 this week; the group has skyrocketed from 53 just three weeks ago and 117 ten weeks ago. I said the stock is not overbought. I am speaking on a short-term basis. The stock closed as high as 17 3/4 on March 25, almost a month ago. We are still slightly below that level as I write this. Prior to yesterday's positive market reaction, the stock fell from 17 3/4 on April 12 to 15 7/8 on April 19. This means we are actually bouncing off of a short-term dip, which is all to the good. On a longer-term basis, the stock is in a steady uptrend. A year ago, the stock was selling around $6 a share. Yesterday's market reaction, while strong, was not as strong as I usually like to see. The stock was up "only" 3/4 of a point on triple average volume. I would have expected at least a point and a half jump on a story as hot as I believe this is. This could be a warning that it's not as good a story as it looks, or it could just mean that I'm closer to the front of the buying queue than usual. I'm gambling that it's the latter. Int'l Colin Energy, based in Calgary, Alberta (403-269-6822), is engaged in the exploration and production of crude oil and natural gas in Alberta and Western Canada. As with all specific stock buy Alerts, I will publish a sell Alert when I recommend selling this stock. All rankings in today's Alert (earnings-per-share, relative strength, and group) are from Investor's Business Daily. ********** Previous Alert: Vol.2 #67 (April 19, 1993) ********** *** To all who download this newsletter *** On May 1, 1993, this newsletter will be available only for a subscription fee. There will be no further uploads on or after that date. From now through April 30, 1993, I am offering at-cost subscriptions (very very inexpensive) by e-mail, fax, and postal mail. These are alternatives to downloading. E-mail via Internet is free during this trial period. 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. -Ken Deen ********** 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. CompuServe: 72020,2050 Internet: 72020.2050@compuserve.com 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-