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. 102 Santa Barbara, CA 93140 November 8, 1992 (805) 565-2039 11:30pm New York Time CompuServe: 72020,2050 Stock+Options Account (editor's personal account): * Tomorrow I will BUY 200 Lincare Holdings Inc. (NASDAQ: LNCR). Friday's closing price was 25. Stock-Only Account (editor's personal account): No trades DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals (computer-generated): None Lincare Holdings Inc. The story here is a combination of explosive earnings, a technical buy signal, a low P/E, and an industry with tremendous long-term growth potential which is gaining favor on the Street. Let's begin by looking at the last four quarterly earnings reports: Quarter Ended Sales($mil) Earnings-per-share ------ ----------------- ------------------------ Sep 30 29.9 vs 22.8 +31% 0.34 vs 0.10 +240% +.24 Jun 30 28.3 vs 21.2 +34% 0.28 vs 0.06 +367% +.22 Mar 31 26.9 vs 19.6 +37% 0.25 vs 0.03 +733% +.22 Dec 31 25.1 vs 18.5 +35% 0.11 vs -0.02 n/a +.13 Notice the explosion in earnings-per-share over the past four quarters. The rightmost column shows earnings growth on a difference basis. I added this because, when looked at in this way, an acceleration in the growth rate is apparent. Impressive though this table is, it does not tell the whole story. In the most recent quarter, the 240% increase in earnings-per-share came in spite of a substantial increase in the number of shares outstanding. Total dollar earnings for the third quarter actually grew by almost 400%, from $937,000 in 1991 to $4,663,000 in 1992. The technical buy signal is a breakout from a six-week cup-with-handle formation. The stock recently reached new high ground for the first time in over six weeks. The P/E, at 26, is very reasonable for a company experiencing such explosive growth. Lincare Holdings, located in Clearwater, Florida, is one of the nation's largest providers of oxygen and other respiratory therapy services to patients at home. This, then, is a play on the trend towards lowering health care costs and the aging of the population. Increasing use of home care for the chronically ill is a major cost-cutting trend on the health care scene in the United States. Any health care reforms from the new administration would likely be favorable to the home care industry. Wall Street appears to be recognizing this: the relative strength of the "Medical - Outpatient / Home Care" group has improved from 20 on Oct. 5 to 58 on Nov. 9, according to Investor's Business Daily. That's on a scale of 1 to 99. Actually, this increase in relative strength hints at a return to favor for a group that was very hot in 1991, but got hit hard during the first half of this year by the flight out of growth and into cyclicals. Investor's Business Daily gives the company an earnings-per-share rank of 95, and a relative strength of 94. Due to technical problems with my data vendor, I am unable to include a graph with this buy alert. However, a chart of this stock appears on page 14 of last Thursday's (Nov. 5) Investor's Business Daily. ---------------------------------------------------------------------------- *** 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-