Ken Deen's THE AGGRESSIVE TRADER(tm) "Seeking double-digit profits in one to four months" BUY/SELL ALERT P.O. Box 4791 Vol. 1, No. 96 Santa Barbara, CA 93140 October 20, 1992 (805) 565-2039 10:00am EDT CompuServe: 72020,2050 Stock+Options Account (editor's personal account): * Today I sold 150 Russ Berrie & Co. (RUS) at 29 1/2. I bought these shares on July 29 at 28 1/2 (see Vol.1 #71). Stock-Only Account (editor's personal account): No trades DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals: * Buy Justin Industries Inc. (JSTN, $31.50) * Buy Centex Corp. (CTX, $29.13) Other Trading Ideas: * Buy Nam Tai Electronics Inc. (NTAIF, $14.13) Russ Berrie & Co. This stock has been a sleeper since I bought it in July. I've been sitting on a paper loss most of the time since then. It has been a disappointing performer. I do still think it will perform well over the next three months. However, it is not a DESI(tm) stock, and my strategy now is to focus my funds on DESI(tm) stocks. Also, on a very short-term basis, we may be seeing a peak right around $29 to $30. In the past week I have invested about $25,000 in two DESI(tm) stocks (TST and JSTN). I expect other strong DESI(tm) stocks to reveal themselves over the next four weeks as third quarter earnings continue pouring in. The main reason I am selling, then, is to raise cash (or, rather, to reduce my margin) in preparation for more buying. Justin Industries Inc. and Centex Corp. These are both DESI(tm) buys. The buy signal is today. Today's high price will become the buy price for the purposes of tracking the DESI(tm) System. Yesterday, I bought heavily into Justin Industries. This remains a strong buy today. See Vol.1 #95 for a discussion of Justin. Centex is also a DESI(tm) buy. I will track it in my monthly reports as I have been tracking all DESI(tm) signals; however, I do not particularly like it. Remember, DESI(tm) buy signals are generated by a computer program. It is rare that I disagree with my computer program, but it does happen. Such is the case with Centex. The are two reasons I don't particularly like Centex. The latest earnings report was very good, but the three quarters prior to that exhibited little to no sales growth (from -3% to +2%). Also, the group is in the bottom 2% of all groups in terms of relative strength, according to Long-Term Values. This means that Centex's group, "Building - Residential/ Commercial" has been seriously underperforming the market. These factors are ignored by the DESI(tm) System. Nam Tai Electronics Inc. The story here is a technical buy signal yesterday (Monday) combined with explosive earnings and sales growth and a very low P/E. Yesterday, the stock closed at 14 1/8, up 2 3/8 (or 20%!) on more than eleven times average trading volume. This was a new all-time for the stock, the first all-time high since January. As such, it represents a breakout from a nine-month base, a technical buy signal. Investors are jockeying for position in advance of the next earnings report, due Oct. 31. The past four quarters show very strong sales and earnings growth: Quarter Ended Sales($mil) Earnings-per-share ----- ----------------- ------------------ Jun 30 14.3 vs 8.4 +71% .36 vs .01 +3500% Mar 31 11.9 vs 6.9 +72% .10 vs .01 +900% Dec 31 12.1 vs 9.5 +27% .42 vs -.04 n/a Sep 30 11.0 vs 10.2 +8% .34 vs .05 +580% At 12 times trailing earnings, the stock is still a bargain. A lot depends on this upcoming earnings report, but I rate this a buy on the strength of recent growth and Monday's technical breakout. The stock is in the top 1% of all companies in terms of earnings-per-share growth, and the top 2% in terms of relative strength, according to today's Investor's Business Daily. The stock is in the "Office Equipment & Supplies" group. This group has been outperforming the market recently. The group relative strength has improved from 37 on Sept. 4 to 67 on Oct. 9, according to Long-Term Values. Nam Tai, headquartered in Hong Kong, manufactures calculators, databanks, electronic scales, and health care products. ---------------------------------------------------------------------------- *** 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-