S.A. Advisory E-Mail Update
April 22nd, 2003
New Buy Recommendation for April 22, 2003
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NEW BUY RECOMMENDATION
EAGLE SUPPLY GROUP, INC. (NASDAQ EEGL, EEGLW)
CURRENT PRICE $ 1.04
The company distributes a variety of roofing supplies and related
products and accessories for use in the commercial and residential
roofing repair and construction industries. Such products include
residential roofing products, commercial roofing products, sheet
metal products, drywall/ plywood products and accessory products.
The Company's residential roofing products include shingles, felt,
insulation, waterproof, underlayment, ventilation systems and
skylights. It's commercial roofing products include asphalt,
fiberglass rolls, organic rolls, insulation, cements, tar, other coatings,
single plies, modified bitumen and roll roofing products. Eagle Supply
offers sheet metal products including aluminum, copper, galvanized
and stainless sheet metal, and drywall/plywood products such as
sheetrock and plywood.
SELECT FINANCIAL DATA
YEAR ENDING JUNE 30TH
2000A 2001A 2002A 2003E 2004E
REV 188M 196M 237M 217E 235E
INCOME/
SHARE
(LOSS) .24 .10 .16 (.01) .27
SHARES
OUTSTANDING
8.5M 8.5M 8.6M 10.2M 10.2M
6 MONTHS DEC 31 02A MARCH 31ST 03E JUNE 30TH 03E
REV $112M 35M 70M
INCOME/
SHARE
(L0SS) (.06) (.06) .11
MORE FINANCIAL DATA
BOOK VALUE ==AROUND $2.10
CASH==INCLUDES RECENT INSIDER PURCHASE OF $1.25 M OF
NEWLY ISSUED COMMON SHARES @ $1.00/SH.
AS OF APRIL 22, 2003--AROUND $2.5M-$3.0M
PE EST FOR 04 --4X-4.5X
PSR(price to sales ratio)--around .05
OTHER IMPORTANT DATA++++++++
1.DURING EARLY APRIL 03 SEVERE HAIL STORMS BLANKETED PARTS
OF TEXAS CAUSING SEVERE PROPERTY DAMAGE. ACCORDING TO
INSURANCE COMPANIES WITHIN THE DAMAGED AREA--LOSSES CAUSED
BY STORMS WILL RESULT IN MORE THAN $800,000,000.00 IN CLAIMS.
DAMAGE TO HOMES WILL BE HUGE IN THE AFFECTED AREAS. ON APRIL
11, 2003 MANAGEMENT RELEASED AN 8-K FILING AND ANTICIPATE VERY
POSITIVE IMPACT DURING THE PRESENT QUARTER AND QUARTER GOING
FORWARD. ON FEB 26, 2003 THE COMPANY FILED AN 8-K THAT RELEASED
REVENUE AND EARNINGS EST. FOR THE FOURTH Q OF 03 AND A COMPLETE
EST FOR REV AND EARNINGS FOR 04.
IT IS IN OUR OPINION, THAT INITIAL REV AND EARNING ESTIMATES WILL
BE RAISED DRAMATICALLY. IT IS OBVIOUS THAT WITH SUCH A HUGE
INSURANCE CLAIM THAT BUSINESS FOR EEGL WILL BE IMPACTED ON
A VERY POSITIVE NOTE!
WITHIN THE FEB 14TH 03 PRESS RELEASE MANAGEMENT ALSO HAS
IMPLEMENTED APPROXIMATELY $2.7 M ON AN ANNUALIZED BASIS
IN EXPENSE REDUCTION AND OTHER PROFIT ENHANCEMENTS.
WE BELIEVE THAT MANAGEMENT HAS BEEN VERY CONSERVATIVE WITH
THEIR NUMBERS SINCE THE INITIAL IPO DURING 1999. IF ONE READS
BETWEEN THE LINE IT IS IN OUR OPINION THAT REV AND EARNINGS FOR
04 COULD SURPASS THE .27/SH EST. DRAMATICALLY!!
IF WE ASSIGN A VERY CONSERVATIVE PE OF 12 TO OUR MANAGEMENT
EARNINGS EST. OF .27 FOR FISCAL 04 THEN A SHARE PRICE OF $3.24
IS CALCULATED--A 200% APPRECIATION POTENTIAL FROM CURRENT
LEVELS. WE BELIEVE THAT THIS IS A 6 TO 9 MONTH PLAY BEFORE
OUR PRICE TARGET SHOULD BE MET.
LARGE PORTION OF BUSINESS GENERATED IS LOCATED WITHIN
TEXAS--THIS IS WHY MANAGEMENT HAS RAISED QUIDANCE FOR
FOURTH QUARTER AND BEYOND.
WEBSITE: WWW.EAGLESUPPLYGROUP.COM
WWW.BARTCHARTS.COM IS A TECHNICAL SITE THAT RATES EEGL
WITH A 80% SHORT TERM BUY AND A 64% OVERALL BUY
WWW.VECTORVEST.COM IS ANOTHER TECHNICAL SITE THAT RATES
EEGL WITH A BUY RATING
INSTITUTIONAL AND INSIDER OWNERSHIP- AROUND 61%
TRADING NEAR 52 WEEK LOW .62- $3.95 HIGH
NASDAQ LISTED AND FULLY REPORTING --EEGL
THIS STORY MAY BE BORING, BUT EVERYONE NEEDS A ROOF OVER
ONES HEAD. THIS COMPANY HAS SHOWN CONSISTENT REV GROWTH
DURING THE PAST NUMBER OF YEARS AND HAS BEEN PROFITABLE. IT
IS OBVIOUS THAT FISCAL 03 WAS CONSISTENT WITH THE RECESSION
THAT PLAGUED OUR SHORES, BUT 04 AND BEYOND LOOK VERY ENCOURAGING.
EEGL COULD ALSO BE BOUGHT OUT FOR AN ATTRACTIVE
PREMIUM OVER CURRENT LEVELS. THE PSR INDICATES AN EXTREMELY
UNDERVALUED SITUATION. EEGL HAS A MARKET CAP OF ONLY $10M
AND SALES OF OVER $215M---CHEAP WAY TO BUY A COMPANY.
IN OUR OPINION, EEGL HAS VERY LITTLE DOWNSIDE RISK, BUT THE
UPSIDE POTENTIAL DURING THE NEXT 6-18 LOOKS EXTREMELY
ATTRACTIVE. THE PE, PSR, P/BK, P/CF AND EBIDTA DEMOSTRATE
AN INVESTMENT OPPORTUNITY WORTH CHECKING OUT!
WE INTEND TO MONITOR EEGL WITHIN WWW.SAADVISORY.COM AND
S. A. ADVISORY NEWSLETTER FOR % GAIN PERFORMANCE.
OTHER STOCK THAT WE ARE MONITORING
JAN 1 03 RECOMMENDATIONS
SYMBOL PRICE CURRENT PRICE STATIS
AES 3.02 4.90 B/H
CPN 3.26 4.47 B/H
MIR 1.87 2.57 B
ELNK 5.45 6.01 B
ELN 2.46 2.90 B
TYC 17.08 14.30 B
VTSS 2.18 2.60 B
SLR 3.55 2.96 B
SANM 4.49 4.80 B
TOY 10.00 9.83 B
INTC 15.57 18.79 B
CSCO 13.09 14.29 B
FDRY 7.04 10.10 B/H
IMAX 4.00 6.00 B/H
LU 1.26 1.64 B
NITE 4.79 4.39 B
PVN 6.49 7.88 B
SUNW 3.11 3.34 B
CC 7.42 5.74 B
PENNY AND LOW PRICE STOCKS
AFPC.OB .14 .12 B/H
DHB 1.66 3.71 B
ETEC.OB .36 .25 B/H
FSPX.OB .09 .15 B
MCTL.OB .22 .22 B/H
MEAD 3.12 2.68 B/H
PGDE.OB .23 .28 B/H
SETO.OB .27 .25 B
SOCR.OB .30 .28 B/H
DFNS.OB .60 .27 B
TARG.OB .15 .25 B/H
FEB 23, 2003
PVN 6.20 7.86 B
AES 3.41 4.91 B/H
CPN 2.62 4.48 B/H
DYN 2.03 3.40 B
WMB 3.58 7.02 H
MIR 1.65 2.57 B
MOST RECENT RECOMMENDATIONS
IECE.OB .48 3/26/03 .51 B
ESAN.OB .32 4/08/03 .29 B
FINAL NOTES:
LOOKING FOR EARNINGS FROM DFNS.OB WITHIN A WEEK- SHOULD
HELP THE STOCK-ATTRACTIVE MILITARY PLAY--A SMALL DHB
DHB --LOOK GREAT--THE CHARTS AND MOMENTUM ARE TAKING THIS
BABY HIGHER--EARNINGS SHOULD BE BULLISH FOR STOCK. UNION
PROBLEMS LOOK DEAD AND MAYBE MANAGEMENT WILL GET MORE
INVESTOR FRIENDLY. I THINK DHB IS HEADING TOWARDS $5.00
WITHIN A FEW MONTHS.
IF YOU WANT OUR NEXT PICK BEFORE THE HERD--SEND $35.00 TO
S. A. ADVISORY 521 BOLSA AVE NEWPORT BEACH , CAL 92663
801-272-4761
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