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. 103 Santa Barbara, CA 93140 November 9, 1992 (805) 565-2039 1:00pm New York Time CompuServe: 72020,2050 Stock+Options Account (editor's personal account): * Today I bought 300 Resurgens Communications (AMEX: RCG) at 22 7/8. Stock-Only Account (editor's personal account): No trades * Today I bought 200 Resurgens Communications (AMEX: RCG) at 22 7/8. DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals (computer-generated): None Resurgens Communications Inc. The story here is a recent explosion in sales and earnings, a technical buy signal, a tremendous market response to last Thursday's blow-out earnings news, a very low P/E, and a massive money flow into the company's industry (cellular telecommunications). Let's begin by looking at the last four quarterly earnings reports. Last Thursday's announcement is the first line. This is truly explosive growth, both in terms of sales and earnings. Quarter Ended Sales($mil) Earnings-per-share ------ ------------------ ------------------- Sep 30 39.6 vs 6.1 +551% 0.38 vs 0.00 n/a Jun 30 37.5 vs 21.2 +77% 0.23 vs -0.40 n/a Mar 31 38.8 vs 6.6 +487% 0.16 vs 0.04 +300% Dec 31 26.9 vs 6.5 +315% 0.04 vs 0.04 0% The latest earnings report hit the wires on Thursday, and the market responded enthusiastically on Friday. The stock was up 2 3/4 points on Friday to close at 21 3/8 on very heavy volume of 314,200 shares, almost 15 times average daily volume. Today so far, the stock is up even more. The technical buy signal results from the fact that Friday's close represents a new 52-week high, the very first new high this year. Now let's look at the P/E. According to my trailing earnings figures (above), which I obtained from calling the company, the P/E is a moderate 28. This does not square with Investor's Business Daily, which lists a P/E of "999". I cannot explain the discrepancy, but neither does it worry me. The mean earnings estimate for fiscal '93 (ends June 30) is $1.48. The current price is 15 times this estimate. Based on the earnings news last week, this mean estimate is probably low and will likely be revised upward. In other words, the stock is selling at a very low multiple of '93 earnings. Resurgens Communications, located in Atlanta, Georgia, provides long distance telephone/telecommunications services and markets cellular telephones and related accessories. Ever since the AT&T / McCaw deal was announced last week, the entire cellular business has been hot. The "telecommunications services" group's relative strength has improved from 43 on Oct. 5 to 67 today, according to Investor's Business Daily. The stock has an earnings- per-share rank of 90 and a relative strength rank of 78, also according to 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-