Ken Deen's THE AGGRESSIVE TRADER(tm) "Seeking double-digit profits in one to four months" BUY ALERT 1339 Virginia Rd. Vol. 1, No. 84 Montecito, CA 93108 September 13, 1992 (805) 565-2039 5:50pm EDT CompuServe: 72020,2050 Stock+Options Account: No trades Stock-Only Account (formerly "Model Portfolio"): No trades DESI Trading System(tm): No trades Other Trading Ideas (these recommendations will not be tracked): Recommended for purchase: Informix Corp. (IFMX, $40.88) Recommended for purchase: Electronic Arts Inc. (ERTS, $32.00) Recommended for purchase: Wellfleet Comm Inc. (WFLT, $41.88) The DESI-3(tm) timing indicator is GREEN for Sept. 14. Software Stocks Lead Fledgling Rally The strong growth-stock-led rally I have predicted appears to be getting underway, and selected software stocks are emerging as the new leaders. Although I am still not buying with my own money, I am recommending three high-tech stocks for purchase at this time, two of which are software stocks. With my own money, I prefer to wait for the next DESI(tm) buy, which most likely will not come until October when third quarter earnings start coming out. Recommended for purchase: Informix Corp. (IFMX, $40.88) Informix is a leader in relational database management software. They also develop modularly integrated business application software. I have previously traded Informix earlier this year; I bought at 34 and sold at 38. Please refer to Vol.1 #46, May 11, 1992, for more details on why I like Informix. Friday, the stock gapped up a quarter point at the open, then closed at 40 7/8, up 1 5/8 on the day on twice average trading volume. This was a very significant session, as it represents a breakout from a seven-week base-- a technical buy signal -- and a new all-time high. Informix is experiencing very powerful sales and earnings growth (see Vol.1 #46), and their next earnings report is due out Oct. 23. At a P/E of only 18, the stock is selling at a bargain price. Informix is discussed briefly on page 13 of Monday's edition of Investor's Business Daily. The stock has an IBD EPS rank of 83 and an IBD Relative Strength rank of 99. Recommended for purchase: Electronic Arts Inc. (ERTS, $32.00) Electronic Arts is a leader in the interactive entertainment software industry. The company makes a variety of sports, fantasy, and action games. On Thursday, the stock broke out of a six-week base on two-and-a-half times average trading volume to set a new all-time high. Friday, the stock followed through strongly, gapping up at the open, and closing up 2 on volume 88% above average. This is very bullish. A brief pullback is likely to consolidate this advance, but any such pullback would be a buying opportunity. At a P/E of 38, the stock is not cheap; however, the company's outstanding growth may justify this multiple. Earnings have been on a fast growth track since 1988. The company earned 9 cents in 1988, 25 cents in '89, 30 cents in '90, 42 cents in '91, and 73 cents in '92 (FY ended March 30). The 5-year growth rate is 45%. That growth rate has been accelerating; the last four quarters show earnings growth of 75%, 63%, 133%, and most recently 157%. The next earnings report is due out Oct. 22. Electronic Arts has an IBD EPS rank of 99 and an IBD Relative Strength rank of 95. It is discussed briefly on page 13 of Monday's edition of Investor's Business Daily. Recommended for purchase: Wellfleet Comm Inc. (WFLT, $41.88) Wellfleet manufactures high-performance multi-protocol computer networking products. I have previously recommended Wellfleet. See Vol.1 #78, August 17. At that time, Wellfleet reached a new all-time closing high of 41 1/2, breaking out of a 7-month base on high volume. In the intervening weeks, the stock has dipped and then come back up. This dip provides an even more solid base for the stock's new try at a bullish run. Yesterday the stock closed at 41 7/8, besting the Aug. 17 close for the first time. For more information, please see Vol.1 #78. -END-