S.A. Advisory E-Mail Update
May 30th, 2003
New Buy Recommendations for May 30, 2003 from S.A.Advisory
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WHY THIS MARKET WILL CONTINUE TO GO HIGHER!
1.HUGE SHORT POSITION REMAINS
2. $4.7 TRILLION ON THE SIDELINE
3. STOCKS ARE HELD BY STRONGER HANDS NOT WILLING TO LET GO FOR SMALL
PROFITS.
4. LOW INTEREST RATES AND LOWER FUEL COSTS
5. FAVORABLE TAX TREATMENT FOR DIVIDENDS AND LONG TERM GAIN ( REDUCED TO 15%)
6. CORPORATE AMERICA LEAN AND REFI DEBT @ LOWER RATES-VERY BULLISH
7.MANY NON-BELIEVERS STILL EXIST
8.NASDAQ REACHING 52 WEEK HIGH AND BEING DRAWN TO 2000 WITHIN 6 TO 12 MONTHS
9.MUTUAL FUNDS UNDER OWN SECURITIES.
10. EARNINGS PICTURE IS IMPROVING
11. CORPORATE AMERICA MUST BUY NEW PLANT AND EQUIPMENT AND "IT" SPENDING WILL
GROW BECAUSE OF OUT DATED EQUIPMENT- IE: ( MSFT WILL NO LONGER SUPPORT WINDOWS 98
AFTER THIS JULY 03)--THIS IS JUST ONE EXAMPLE OF MANY TECHNOLOGY UPGRADES.
NEW BUY RECOMMENDATION :
ALLIED DEFENSE GROUP, INC. AMEX--------ADG
CORPORATE BUSINESS BRIEF: THE COMPANY IS A DIVERSIFIED INTERNATIONAL
DEFENSE AND SECURITY FIRM WHICH DEVELOPS AND PRODUCES CONVENTIONAL
AMMUNITION MARKETED TO DEFENSE DEPARTMENTS WORLDWIDE; DESIGNS,
PRODUCES AND MARKETS SOPHISTICATED ELECTRONIC AND MICROWAVE SECURITY
SYSTEMS PRINCIPALLY FOR EUROPEAN AND NORTH AMERICAN MARKETS; MANUFACTURES
BATTLEFIELD EFFECTS SIMULATORS AND OTHER TRAINING DEVICES FOR THE MILITARY,
AND DESIGNS AND PRODUCES STATE-OF-THE-ART WEATHER AND NAVIGATION SOFTWARE
DATA AND SYSTEMS FOR COMMERCIAL AND MILITARY CUSTOMERS.
WEBSITE: www.allieddefensegroup.com
CORPORATE CONTACT: JOHN MEYER 1-800-847-5322
INVESTOR RELATIONS: JIM DREWITZ 1-972-355-6070
RECENT PRESS RELEASES: REVIEW 05/29/03, 05/22/03, 04/30/03
AMEX- SYMBOL-ADG- CURRENT PRICE $16.95
FULLY DILUTED SHARES OUTSTANDING AS OF MARCH 31ST 03- 5,919,028
BACKLOG AS OF MAY 29TH $156,000,000.00
INSTITUTIONAL HOLDINGS
Bricoleur Capital--513k
FMR--445k
Dimensional Fund--310k
Riverview Group--315K
MANAGEMENT AS A GROUP--406K SHARES
CASH -ON-HAND AS OF MARCH 31 03--$36 MILLION
BOOK VALUE--AROUND $15.60
52-WEEK RANGE FOR 2002--$13.58---$28.04
2001--$6.15----$19.70
SELECT FINANCIAL DATA YEAR ENDING DEC 31ST
2000 A 2001 A 2002A 2003 E
rev $107.7 mil $96.6 mil $131 mil $156 mil
net income/
sh $1.79 $2.10 $1.92 $2.00
shares out-
standing 4.8 mil 4.9 mil 5.3 mil 5.9 mil
********************************************************************************
SELECT FINANCIAL DATA MARCH 31 ST QUARTER
2003 A 2002 A
rev $42.6 mil $16.9 mil
net income/sh
fully diluted .68 .23
shares outstanding 5.9 million 5.18 million
BRIEF OVERVIEW:
WE RATE ADG WITH OUR HIGHEST BUY RECOMMENDATION! IN OUR OPINION, FOR THE
LONG TERM INVESTOR TYPE (1-3 YEARS BUY/HOLD PERIOD) THIS SITUATION COULD
AND SHOULD DRAMATICALLY INCREASE IN VALUE BY A COUPLE OF HUNDRED %!
AT PRESENT ADG IS TRADING AT A MERE 8X 2002 AND A CONSERVATIVE 8X 2003 E
EARNINGS PICTURE. REVENUE GROWTH SHOULD EXCEED THE EST. 16% GROWTH RATE
(JUST LOOK @ THE HUGE $156 MILLION BACKLOG --WE STILL HAVE 7 MONTHS LEFT IN
2003 FOR THAT NUMBER TO GROW). WE BELIEVE THAT ADG SHOULD TRADE @ A PE
MULTIPLE OF AT LEAST 16X- NOT 8X--THIS WOULD GENERATE A SHARE PRICE OF
$32/SH NOT THE $17.00--IF THE PSR WAS VALUED @ 1X OR 1.5X THEN OUR SHARES WOULD
APPRECIATE TO $30 AND $45 RESPECTIVELY. EVEN IF ADG WAS TO TRADE @ 2X BOOK-
WE WOULD GENERATE A SHARE PRICE DOUBLE THE CURRENT LEVEL. IN OUR OPINION,
ADG IS A "JUICY" TAKEOVER CANDIDATE @ CURRENT LEVELS--IT COULD EASILY BE A
SWALLOWED BY MUCH LARGER DEFENSE COMPANY ON THE PROWL FOR CUTTING-EDGE
ORDNANCE TECHNOLOGY AND A "HOMELAND SECURITY PLAY"!! PLEASE VISIT THE WEB-
SITE AND REVIEW THE MANY ASPECTS OF ADG. IT IS IN OUR OPINION THAT AS INVESTORS
START TO BELIEVE THAT THE "DEFENSE GAME" IS A LOOOONG TERM WORLDWIDE
REALITY THAT SECOND & THIRD TIER DEFENSE COMPANIES WILL HAVE THEIR PE MULTIPLES
EXPAND BECAUSE OF REV AND EARNINGS STABILITY. THE INDUSTRY WILL ALSO CONTINUE
TO CONSOLIDATE--THE BIG FISH EATING THE LITTLE FISH! WE ASSUME THAT IT IS POSSIBLE
THAT ADG WILL DO A FORWARD SPLIT SOONER THAN LATER IF IT WANTS TO ATTRACT GREATER
"STREET" PARTICIPATION--IT IS ALSO POSSIBLE THAT A DIVIDEND COULD BE ISSUED IN ORDER TO
ATTRACT A DIFFERENT VARIETY OF INVESTORS.. ADG COULD ALSO BE ON THE "HUNT" FOR NICHE
ACQUISITIONS THAT ENHANCES THE CORPORATE UMBRELLA , WHICH IN TURN FORTIFIES THE
REVENUE MIX..IN OUR OPINION, THIS SITUATION IS A VALUE AND FUNDAMENTALISTS DREAM
STOCK @ "FIRE SALE PRICES"
WE INTEND TO MONITOR ADG FOR % GAIN PERFORMANCE
PORTFOLIO PERFORMANCE FROM JAN 01, 2003
SYMBOL PRICE RECOMMENDED CURRENT PRICE STATUS
AES $3.02 $7.02 B/H
CPN 3.26 5.20 B/H
MIR 1.87 3.46 B/H
ELNK 5.45 6.74 B
ELN 2.46 6.11 B
TYC 17.08 17.70 B
VTSS 2.18 5.03 B/H
SLR 3.55 4.00 B
SANM 4.49 5.72 B
TOY 10.00 11.64 B
INTC 15.57 20.82 B
CSCO 13.09 16.41 B
FDRY 7.04 15.29 S 1/2
IMAX 4.00 7.64 B/H
LU 1.26 2.21 B/H
NITE 4.79 6.26 B/H
PVN 6.49 9.04 B/H
SUNW 3.11 4.35 B
CC 7.42 7.19 B
AFPC.OB .14 .14 B
DHB 1.66 4.00 B/H
ETEC.OB .36 .36 B
FSPX.OB .09 .10 B
MCTL.OB .22 .35 B/H
MEAD 3.12 2.86 B
PDGE.OB .23 .27 B
SETO.OB .27 .25 B
SOCR.OB .30 .50 B/H
DFNS.OB .60 .27 B
TARG.OB .15 .25 B
PVN 6.20 9.04 B/H
AES 3.41 7.92 B/H
CPN 2.62 5.25 B/H
DYN 2.03 4.98 B/H
WMB 3.58 7.92 B/H
MIR 1.65 3.45 B/H
IECE.OB .48 3/26/03 .80 B/H
ESAN.OB .32 4/06/03 .30 B
EEGL 1.04 4/22/03 1.40 B
ADG 16.95 5/30/03 ------------------------B
FAVORITE PENNY STOCK
EMTEC INC. ETEC.OB IS THE SYMBOL ON OTC BB
BUSINESS--RELATED TO "IT" SPENDING
FOR THE NINE MONTHS REV $74 MILLION WITH SMALL LOSSES OF $530K
YEAR END NUMBERS WILL BE OUT DURING 3RD WEEK OF JUNE 03(YEAR END #'S)
FROM CONVERSATION WITH MANAGEMENT: FISCAL 03 WILL SHOW RECOVERY.
FISCAL 04 ACCORDING TO MANAGEMENT LOOKS AND FEELS VERY ENCOURAGING.
WE HAVE SPOKE TO MANAGEMENT MANY TIMES AND THIS WAS THE MOST UPBEAT
CONVERSATION ABOUT BUSINESS IN 9 MONTHS. REVENUES SHOULD SURPASS $100 MILLION
AND STRONG PROFITS SHOULD ALSO BE ANTICIPATED. WE RATE ETEC.OB WITH A STRONG
BUY RECOMMENDATION. AT PRESENT THERE ARE ONLY 7 MILLION SHARES OUTSTANDING-
REVIEW PAST 10Q'S--CURRENT PRICE .36---THIS STOCK HAS HUGE UPSIDE POTENTIAL--MANAGEMENT
IS HIGHLY CAPABLE OF LEADING THIS COMPANY TO GREATER PROFITS. NOTE: IN A BAD ECONOMY
ETEC.OB LOST VERY LITTLE MONEY AND GREW THEIR REV BASE---EVEN A SLIGHT UPTICK IN BUSINESS
SPELLS HIGHER RETURNS FOR INVESTORS.. THE CONTRACT WITH THE STATE OF N.J. IS WORTH
$30 MILLION A YEAR..
SEND US $50 AND WE WILL INFORM YOU ABOUT OUR NEXT "NEW" RECOMMENDATION BEFORE
WE INFORM ANYONE ELSE--GET THE RECOMMENDATION FIRST!!!!!!
SEND CHECK TO S. A. ADVISORY
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801-272-4761
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