Ken Deen's THE AGGRESSIVE TRADER(tm) "Seeking double-digit profits in one to four months" BUY ALERT P.O. Box 4791 Vol. 1, No. 93 Santa Barbara, CA 93140 October 16, 1992 (805) 565-2039 12:20pm EDT CompuServe: 72020,2050 Stock+Options Account (editor's personal account): * Today I bought 200 Media Logic Inc. (TST) at 27 1/2. Stock-Only Account (editor's personal account): * Today I bought 200 Media Logic Inc. (TST) at 27 1/2. DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals: None BUY Media Logic Inc. (TST) I may get a DESI(tm) buy signal on this stock after the market close today. If I do, I will send another buy alert tonight. A green light for Monday will spell a DESI(tm) buy signal on Media Logic, and this appears very likely. Unlike Germantown Savings Bank (Vol.1 #92, yesterday), I am very very enthusiastic about Media Logic. So enthusiastic that I have put $10,900 of my own money into it, split evenly over my two accounts. A typical buy for me is around $4,000. This is a strong buy! The market gave a delayed reaction to the Sep 30 earnings report (see below). The earnings report came out Tuesday, and the strong market reaction occurred yesterday (Thursday), when the stock shot up 2 3/8 points to close at 25 3/8 on three times average daily volume. That's a 10% rise in one day! Due to technical difficulties, I am unable to include a stock chart with this buy alert, so I will attempt to describe it: This stock has gone almost straight up all year. I bought this rocket ship today at 27 1/2. Yesterday's close was 25 3/8. In early January of this year, the stock was at 2 1/8. That's right, this stock has made a ten-fold move since January! Therefore, the stock must be too expensive, right? Wrong! Earnings and sales have been growing even faster, and the stock is still cheap at a very modest 25 times earnings. That's about what the S&P 500 is selling for -- and while 25 times earnings may be expensive for the mature companies in the S&P 500, it is cheap for an emerging small company with explosive sales and earnings growth. Let's take a look at the last four quarters. I've shown earnings and sales comparisons on a difference basis as well as on a percentage basis. On a difference basis, an acceleration in the sales and earnings growth rate is apparent. On any basis, these numbers are spectacular: Quarter Ended Sales($mil) Earnings-per-share ----- --------------------- ------------------------ Sep 30 4.6 vs 2.0 +135% +2.6 0.42 vs 0.10 +320% +.32 Jun 30 3.8 vs 1.4 +180% +2.4 0.32 vs 0.01 +3100% +.31 Mar 31 3.0 vs 1.7 +73% +1.3 0.26 vs 0.05 +420% +.21 Dec 31 2.3 vs 1.0 +130% +1.3 0.12 vs -.13 n/a +.25 This growth is a fairly recent phenomenon for Media Logic. The company reported red ink in each of the years 1987 through 1990. Media Logic ranks in the top 5% of all stocks in terms of 5-year earnings- per-share growth, and in the top 1% in terms of relative strength, according to Investor's Business Daily. Media Logic manufactures and sells precision computer-based test equipment used to measure recording performance and quality of computer disks and magnetic tape cartridges. ---------------------------------------------------------------------------- *** To all who download this newsletter *** I invite you to send me your CompuServe ID to receive these alerts by e-mail. You will get them faster. I do not charge for this service. In addition, I invite you to send me your paper mail address. I will then send you a paper mailing once a month. This is the only way to receive the monthly status reports, which are chock-full of informative charts, graphs, and tables. I pay the postage. The monthly paper mailings also include hardcopy with stock charts of these buy/sell alerts. -Ken Deen ---------------------------------------------------------------------------- This issue of The Aggressive Trader(tm) may be copied and distributed freely. Please pass it around! The Aggressive Trader is edited and published at irregular intervals, but at least monthly, by Kenneth L. Deen ("Ken Deen"), P.O. Box 4791, Santa Barbara, California 93140, (805) 565-2039. Ken Deen, his 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 Kenneth L. Deen. Copyright (c) 1992 Kenneth L. Deen. -END-