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. 112 Santa Barbara, CA 93140 November 23, 1992 (805) 565-2039 10:00am New York Time CompuServe: 72020,2050 Stock+Options Account (editor's personal account): No trades Stock-Only Account (editor's personal account): * BUY Prima Energy Corp. (NASDAQ: PENG). This morning I bought 150 PENG at 24 1/4. DESI(tm) Account (a computer-simulated hypothetical account): No trades DESI(tm) Buy/Sell Signals (computer-generated): None Other Trading Ideas: * BUY SBE Inc. (NASDAQ: SBEI, $17.25). * BUY National Western Life (NASDAQ: NWLIA, $42.50). Prima Energy Corp. Here we have a technical buy signal and a very strong market reaction to a very strong earnings report on a fast-growing and under-valued company. The technical buy signal occured on Friday when the stock broke out of an 8-week trading range. It was up 3 points to close at 22 1/2, a new all- time high, and the first all-time high in eight weeks. Friday's breakout occurred on extremely heavy trading of 90,400 shares, more than seven times the average daily volume for this stock. That is the heaviest volume day for this stock since October 1990 at least (that's as far back as I have data). Heavy volume as a stock breaks out of a trading range is a bullish technical sign. Friday's impressive buying spree was a reaction to a stellar earnings report: earnings-per-share were up 106%. Here are the last four quarters of sales and earnings figures: Quarter Ended Sales($mil) Earnings-per-share --------- ----------------- ----------------- Dec 31 91 4.0 vs 3.0 +31% 0.78* vs 0.31 +152% Mar 31 92 3.1 vs 3.0 +5% 0.39 vs 0.30 +30% Jun 30 92 2.5 vs 2.2 +17% 0.30 vs 0.17 +76% Sep 30 92 2.9 vs 2.0 +46% 0.37 vs 0.18 +106% * includes non-recurring item The stock is selling for only 12 times trailing earnings, a very attractive valuation. The stock carries a 99 earnings-per-share ranking (the highest possible) and a 98 relative-strength ranking. The stock's group is "Oil & Gas - US Exploration & Production". The relative strength ranking of this group is high but falling. It is now 88, but 3 weeks ago it was 99. These numbers are worrisome. I usually insist on seeing a rising trend in the group relative strength. However, the buy indications on the stock are so strong that I decided to nibble anyway. Prima Energy, located in Denver, Colorado, is engaged in the exploration and development of oil and gas, primarily in the mid-continent/Rocky Mountain areas. Loyal readers may recall that I have been in Prima Energy before. I bought on Sept. 25 at 16 1/2, and sold on Nov. 3 at 20 1/4. SBE Inc. SBE Inc., located in Concord, California, manufactures microcomputer boards, systems and software for original equipment manufacturers and systems integrators. The stock is in the "Computer-Mini/Micro" group. This group has been gaining favor on the Street; the group relative strength has increased from 88 four weeks ago to 94 today. The stock broke out of a 9-month consolidation period about two weeks ago. The breakout occured on very heavy volume. Since then, profit-taking on light volume has trimmed the stock's price from a high of 18 3/4 on Nov. 10 to Friday's close of 17 1/4. I expect this two-week dip is completed; I expect the stock to resume its upward trend very soon, probably today. Earnings for the last four quarters have been on a fast growth track, with gains of +111%, +64%, +313%, and, most recently, +138%. Sales over these same quarters were up +32%, +43%, +65%, and +41%. The next earnings report is expected this coming Thursday. A lot will depend on how good the numbers are in this upcoming report. At 14 times trailing earnings, the stock is a bargain. The stock carries an EPS ranking of 99 and a relative strength ranking of 96. National Western Life National Western Life, located in Austin, Texas, writes a complete line of individual whole life and term life insurance in 43 states, the Distict of Columbia, and several foreign countries. "Life insurance" stocks as a group have been gaining favor recently; the group relative strength ranking has improved from 74 four weeks ago to 79 today. Earnings and sales at National Western have been growing at a very rapid clip, although there is a deceleration in the growth rate. I usually stay away from a decelerating trend in the growth rate; however, in this case, the stock's price is so very very low, that I am recommending it as a buy in spite of the deceleration. The stock is selling at only 2.7 times earnings! Earnings-per-share for the last three quarters were up +208%, +162%, and, most recently, +90%. (Four quarters ago, earnings-per-share were $3.38 vs. a loss in the year-earlier period.) Sales in the latest four quarters have grown +53%, +50%, +32%, and +24%. The next earnings report is due March 4. On Friday, the stock was up 3 1/4 on very heavy volume to close at 42 1/2, an all-time high, and the first all-time high in over eight months. This is a breakout from an 8-month consolidation period. That consolidation period followed a very impressive 565% gain in just over a year; the stock soared from 5 3/4 on Jan. 21, 1991 to 28 1/4 on March 4, 1992. The stock carries an EPS ranking of 90 and a relative strength ranking of 82. All earnings-per-share rank, relative-strength rank, and group-relative- strength rank numbers in this buy alert are from 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-