S.A. Advisory E-Mail Update
 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ S.A.Advisory Newsletter Email alert for S.A.Advisory.com - Jan 04, 2005
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CONTENT OF EMAIL ALERT:
OPINION OF 2005 INVESTMENT HORIZON
STOCK PICK OF THE YEAR FOR DICK DAVIS DIGEST TO BE RELEASED
TOWARDS THE END OF JAN 2005
OTHER RECOMMENDATIONS
When one considers that 2004 had to deal with the Presidential Election,
sky high Oil prices, the dollar reaching a 9 year low against the Euro,
terrorism, Iraq and the creeping of interest rates to "higher ground"--
the overall stock market did extremely well with gains across the board!
We at www.saadvisory.com had another BANNER YEAR OF GAINS!
Please review the portfolio's listed within this message for view of
many of the recommended investments during the past couple of years.
Feel free to review historical E-mail Alerts for stock selections that
date back as far 1996!
Like usual we always excel in rewarding investors with huge gain in
the Micro-cap arena and 2004 was no exception! We also had huge
gains in our Russian Portfolio, had mixed, but attractive rewards in the
technology sector that we usually concentrate on and good returns in
all the rest.
We remain successful year after year ( except 2002) because we do not
vary with investment strategy that has followed us around since 1983 when we
first published S.A.Advisory. We stick with the fundamentals, are not emotional towards
buying stocks when the sky is falling, love the out-of-favor, the turn-around and
of course the micro-caps that every investor HATES- but usually loves the ride
when we find one that increases in value by 5 to 10 times!
We have in the past published less frequently because we don't find it that
necessary to create investment ideas every day--we prefer to buy discounted
value and wait patiently for the seeds of value to grow into money trees that are
harvested over the longer term. We prefer to hold stocks at least 1 year because
of the attractive tax advantage and will continue to focus on reaching this
milestone with respect to investing and securing PROFITS!
Unless something terrible happens during 2005--we anticipate another strong
stock market in the USA. If Oil prices continue to slide-this factor alone will
add enormous upside pressure on stocks. The climate for stock in our opinion
for 2005 looks very promising and presently remain 150% invested ( remains
heavily margined--not for the average investor type). The weaker dollar in our
opinion aids our American companies and actually helps many parts of our
economy compete in the world marketplace. Our Corporations have never
had better balance sheets, efficiently run operations and favorable tax
regulations that also bodes well for better than anticipated profits. An interesting
tax regulation that takes effect during 2005 is aimed at large USA companies
that have amassed huge amounts of money off shore from business subs and
not brought it home because of the high tax rate on that money, but for 2005
all monies brought home will only be taxed 5% if the money is used for plant
and equipment upgrades---this is an extremely bullish development and adds
to the positive tone of 2005 ( billions and billions of $$$$)!
With lower Oil prices, stable interest rates, less corporate borrowing @ low rates,
a greater calmness in Iraq, a very positive business climate with respect to regulations,
still a record short position on stocks by non-believers, huge hoards of money on the
sideline and the seasonal aspect of investing--all leads us to believe that 2005 will
make us lots of spending money by the end of the year! We anticipate a continued
rally in the new year--a slight correction during 1st Q reporting-- a lull during the summer
months and a strong 2nd half of 3rd Q and a strengthening 4th Q.
We still favor micro-caps, out-of-favor Tech, select issues and PFIZER (PFE)!
OUR NEXT SECTION WILL CONTAIN OUR MICRO-CAP STOCK PICK OF THE
YEAR THAT WILL APPEAR WITHIN THE DICK DAVIS DIGEST
SLATED FOR RELEASE DURING THE LATTER PART OF JAN 2005!
Dick Davis Digest -Stock Pick of the Year for 2005 ( Micro-cap)
last years pick --AFPC.OB @ .60--reached $1.90 and closed for the year @ $1.28
2003 pick --------DFNS.OB@ .60--currently @ $1.16 and high for this year- $1.32
OUR STOCK OF THE
YEAR FOR 2005
SWANK (SNKI.PK) $1.15
FULLY REPORTING WITH THE SEC. CLASSIC TURN-AROUND SITUATION OBSCURE AND UNKNOWN EXTREMELY CHEAP AND UNDERVALUED BASED UPON FUNDAMENTALS MANAGEMENT AND EMPLOYEES OWN LARGE PART OF COMPANY GREAT TAKEOVER CANDIDATE HUGE UPSIDE POTENTIAL NEAR TERM AND LONG TERM INITIALLY RECOMMENDED AUGUST 30TH 2004 @ .70-(SEE EMAIL ALERT FOR AUGUST 30TH 2004 5.5 MILLION SHARES OUTSTANDING BOOK VALUE =.50 25,000,000.00 LINE OF CREDIT FROM WELL FARGO SWANK DESIGNS AND MARKETS MEN'S JEWELRY, BELTS, AND PERSONAL LEATHER GOODS. THE COMPANY DISTRIBUTES ITS PRODUCTS TO RETAIL OUTLETS THROUGH- OUT THE USA AND IN NUMEROUS FOREIGN COUNTRIES. THESE PRODUCTS, WHICH ARE KNOWN THROUGHOUT THE WORLD, ARE DISTRIBUTED UNDER THE NAMES "KENNETH COLE", "TOMMY HILFIGER", "GEOFFREY BEENE", "CLAIBORNE", "GUESS", "PIERRE CARDIN", FIELD AND STREAM", "COLOURS BY ALEXANDER JULIAN", AND "SWANK". THE COMPANY ALSO DISTRIBUTES MEN'S JEWELRY AND LEATHER ITEMS TO RETAILERS UNDER PRIVATE LABELS. THE EXCITING PART OF THIS STORY AND MOST COMPELLING IS THE FACT THAT THIS COMPANY HAS DRAMATICALLY CHANGED ITS BUSINESS MODEL AND STRATEGY! DURING 2003 THE COMPANY MOVED ALL OPERATIONS FROM THE USA TO LATIN AMERICA AND CHINA. THE HEAD COUNT WAS REDUCED FROM 456 TO 251, DEBT WAS SLASHED AND A "NEW" LINE OF CREDIT WAS RECEIVED FROM WELLS FARGO FOR $25,000,000.00! THIS COMPANY HAS NOT SHOWN A FULL YEAR OF PROFIT FOR MANY YEARS UNTIL NOW! NOTE: SNKI.PK HAS A HUGE NOL ( $9.5 MILLION) THAT IS EXTREMELY VALUABLE AND WILL OFF SET TAXES FOR MANY YEARS AND CAN ALSO BE USED AS AN ATTRACTIVE MERGER INCENTIVE OR ACQUISITION CANDIDATE VARIABLE! REASON WE LIKE THIS STOCK AND HAVE DECIDED TO USE IT AS OUR STOCK PICK OF THE YEAR FOR 2005 MICRO-CAP THIS COMPANY HAS NOT SHOWN A PROFIT SINCE 1999 WHEN IT EARNED .43 FOR THE YEAR ENDING DEC 31,1999 ( 1997-1999---ALL SHOWED LARGE PROFITS .43,.66 AND .89 RESPECTIVELY). AS MENTIONED 2000-2003 THE LOSSES MOUNTED AND THE SHARE PRICE SUNK DRAMATICALLY!!! DURING 2000 -- 2003 THE LOSSES WERE $2.17, $2.85, .01 AND $.47 RESPECTIVELY! THIS BRINGS US TO 2004 ENDING DEC 31, 2004 --THIS COMPANY HAS BECAUSE OF BUSINESS CHANGES --MENTIONED EARLIER HAS RESULTED IN THE FIRST NINE MONTHS OF 2004 SHOWING US A PROFIT FROM OPERATIONS-A SMALL PROFIT BUT NEVER THE LESS! THEE FOURTH QUARTER HAS BEEN THE WATERSHED FOR ALL RETAILERS AND THIS SITUATION IS NO EXCEPTION.THE COMPANY HAS CONSISTENTLY SHOWED A HUGE PROFIT DURING THE FOURTH QUARTER EVEN THOUGH FOR THE YEAR LOSSES STILL MOUNTED! IMPORTANT NOTE: DURING THE PAST FEW YEARS WHEN THE COMPANY WAS STILL MANUFACTURING IN THE USA PROFITS DURING THE FOURTH Q SWANK STILL EARNED .39 IN 2002 4TH Q AND .19 IN 2003 4TH Q---THIS REGARDLESS OF THE BLOATED OPERATIONS THAT HAD BEEN BLEEDING THIS COMPANY TO DEATH! THE COMPANY IS PROFITABLE FOR ONE MAIN REASON--THEY CLOSED USA OPERATIONS AND MOVED TO LATIN AMERICA AND CHINA ENABLING THE COMPANY TO COMPETE AND PROFIT! THE MAIN FACT: SNKI.PK MAKES BIG MONEY DURING THE FOURTH Q LIKE MOST RETAILERS-- THEY MADE MONEY EVEN THOUGH THE OPERATIONS DURING THE REST OF THE YEAR HAD HUGE LOSSES---NOW THEY ARE PROFITABLE DURING THE FIRST 9 MONTHS OF 2004--WHICH NEVER HAPPENS BECAUSE OF THE OLD BUSINESS MODEL. WE BELIEVE THAT BECAUSE OF LOW INTEREST RATES FROM BORROWING, STREAMLINE OPERATIONS, A FAIRLY GOOD XMAS SEASON AND A GREATER INTEREST BY MEN TO DRESS BETTER THAT SNKI.PK SHOULD SHOW HUGE PROFITS FOR THE 4 TH Q AND ACTUALLY BE EXTREMELY PROFITABLE FOR THE YEAR 2004. WHEN LOOKING @ THE PAST WE BELIEVE THAT REV FOR THE FOURTH SHOULD EXCEED $40 MILLION ( $65 MILLION FOR THE 9 MONTHS) AND EARNINGS/SHARE SHOULD EASILY REACH .35, WHICH IN TURN SHOULD DRIVE SNKI.PK DRAMATICALLY HIGHER FROM CURRENT LEVELS. THE NEAR TERM PLAY OF COURSE IS THAT YEAR END NUMBERS ARE RELEASED DURING MARCH 2005-- SO THE WAIT IS NOT THAT LONG FOR A QUICK PLAY-- AND IF YOU LOOK @ THE LONG TERM CHART YOU WILL SEE THAT THE STOCK ALWAYS TRENDS HIGHER DURING THE 1ST Q IN ANTICIPATION OF GOOD 4TH Q NUMBERS.. IT IS POSSIBLE THAT OUR #'S ARE ON THE LOW SIDE--ONLY TIME WILL TELL! IF WE ASSIGN A PE OF 10X TO SNKI.PK AND USING A EARNINGS MODEL OF .35 OUR RESULTING SHARE PRICE NEAR TERM COULD EQUAL $3.50 A 204% APPRECIATION FROM CURRENT LEVELS! AT PRESENT THE MARKET CAP IS AROUND $6 MILLION AND REV EQUAL AROUND $100 MILLION- SO THE PSR IS .06---SUPER CHEAP NUMBER IF SNKI.PK EARNS .35-- WITH A SHARE PRICE OF $1.15 THE PE EST. IS A SUPER CHEAP 3.2X 2004 EARNINGS PROJECTIONS. FOR 2005 THE EARNING PICTURE CAN ONLY BECOME BRIGHTER-POSSIBLE ACQUISITION OR EVEN SALE OF THE COMPANY OR EVEN AN INCREASING STRENGTH OF THE ECONOMY ALL ADD TO THE ATTRACTIVENESS OF THIS INVESTMENT OPP. WE ANTICIPATE SALES FOR 2004 TO BE AROUND $100 MILLION AND EARNING/SHARE OF AT LEAST .35/SHARE BASED UPON 5.5 MILLION SHARES OUTSTANDING. WE BELIEVE THAT SNKI.PK DESERVES OUR RECOMMENDATION AS "STOCK PICK OF YEAR" FOR MICRO-CAPS--REGARDLESS THAT IT TRADES ON THE PINKS. WE BELIEVE THAT WITHIN 6 MONTHS THAT SNKI.PK WILL CONSIDER LISTING ITSELF ON SOME OTHER EXCHANGE! WE RATE SNKI.PK WITH A STRONG BUY RECOMMENDATION SHORT AND LONG TERM! BROKER CONTACT: MR. CHESLER 18009917991 WE INTEND TO MONITOR ALL OF THE LISTED INVESTMENTS IN THIS SECTION FOR% GAIN PERFORMANCE RECOMMENDATION BRIEFS
BLUE CHIP PHARMA THAT HAS BEEN OVER SOLD DUE TO ARTHRITIS DRUG CELEBREX AND VIOXX SCENARIO. TRADING NEAR 52 WEEK LOW BECAUSE OF THE UNCERTAINTY OF CELEBREX TYPE DRUG AND POTENTIAL LAWSUITS STEMMING FROM HEART ATTACK ISSUES FROM PATIENTS THAT HAVE TAKEN THIS MEDICATION. ALSO OUT OF FAVOR BECAUSE OF THOUGHTS THAT CONGRESS WILL ALLOW CAP ON PRICES OF DRUGS AND BELIEF THAT PFE IS LIGHT ON NEW DRUGS AND REV AND PROFITS WILL DROP NEAR TERM BECAUSE DRUG PATENTS EXPIRING . WE OF COURSE LIKE PFE FOR ALL THE ABOVE REASONS-- THE HERD IS ALWAYS OVERLY NEGATIVE AND EMOTIONAL. THE YIELD REMAIN JUICY @ ALMOST 3%, ONLY TRADING @ 13x DEPRESSED EARNINGS AND HAS NOT TRADED THIS LOW SINCE 1998! WORSE CASE SCENARIO PFE IS ESTIMATED TO EARN AROUND $2.20 FOR 05--THIS STOCK IS BEATEN TO HELL AND BACK- TOTALLY WASHED OUT AND DRUG INDUCED. IT IS ANTICIPATED THAT PFE WILL LAUNCH AS MANY AS 5 NEW DRUGS IN 2005 AND HAS A HUGE CASH HOARD OF $19,000,000,000.00. THE CASH FLOW IS $12.5 BILLION PEOPLE NEED TO REALIZE THAT NO DRUG IS RISK-FREE AND PEOPLE HAVE OVERREACTED! AT CURRENT PRICES PFE IS AT A 25% DISCOUNT TO THE INDUSTRY'S PE AND FETCHES A 30%+ DISCOUNT TO THE S & P 500'S P/E. THE BROKERAGE FIRMS HATE IT! THE INSTITUTIONS HATE IT! THE PUBLIC HATE IT ! WE AT S.A.ADVISORY LOOOOOVE IT! WE RECOMMENDED PFE LAST YEAR @ $34.90--NOW FIRE SALE PRICE $27.00 WE CURRENTLY RATE PFE WITH A STRONG BUY RECOMMENDATION FOR CAPITAL APPRECIATION AND ATTRACTIVE DIVIDEND YIELD! 2. CADENCE DESIGN (CDN) PRICE $13.22 CADENCE IS THE WORLD'S LARGEST SUPPLIER OF ELECTRONIC DESIGN TECHNOLOGIES ANDENGINEERING SERVICES. CADENCE PRODUCTS AND SERVICES ARE USED TO ACCELERATE AND MANAGE THE DESIGN OF SEMICONDUCTORS, COMPUTER SYSTEMS, NETWORKING EQUIPMENT, TELECO EQUIPMENT, CONSUMER ELECTRONICS, AND OTHER ELECTRONICS BASED PRODUCTS. NOT VERY EXPENSIVE OPP. WHEN YOU CONSIDER THAT THE FUNDAMENTALS ARE VERY STRONG AND THE BALANCE SHEET IS VERY ATTRACTIVE. NOT FOLLOWED BY MANY BROKERAGE FIRMS, TRADING CLOSE TO 52 WEEK LOW AND ONLY TRADING @ A MODEST PE OF 17 BASED UPON 2005 #'S. NOT MUCH EXPECTED FROM THIS OPP. SO IN OUR OPINION THE UPSIDE LOOKS ATTRACTIVE LONG TERM. WE RATE CDN WITH A STRONG BUY RECOMMENDATION AT CURRENT LEVELS! 3. SUN MICROSYSTEMS (SUNW) PRICE $4.66 SUNW IS A LEADING PROVIDER OF INDUSTRIAL-STRENGTH HARDWARE, SOFTWARE AND SERVICES THAT NET WORK. ANOTHER WORLD CLASS COMPANY THAT HAS FEW BELIEVERS AND SMALL EXPECTATIONS DURING 2005 AND BEYOND. SUNW SPORTS A LOW PSR AND LOW P/B. COMPANY HAS A HUGE CASH HOARD OF $3.5 BILLION AND FREE CASH FLOW IS A MERE $2 BILLION. EARNINGS EST. ARE LOW -LEADING US TO BELIEVE THAT ANY SURPRISES TO THE UPSIDE IN #'S COULD PROPEL SUNW SKYWARD. AT $5 AND CHANGE GOING INTO THE NEW YEAR WE SEE LITTLE DOWNSIDE RISK AND POSSIBLE A JAN 05 RALLY THAT COULD POP SUNW A BUCK OR SO! WE LIKE ITSHORT TERM AND THELONG TERM APPRECIATION POTENTIAL. IN OUR OPINION, THE CASH HOARD COULD BE USED FOR SPECIAL ADIVIDEND AND/OR ACQUISITIONS. WE RATE SUNW WITH A STRONG BUY RECOMMENDATION AND WILL MONITOR FOR % GAIN PERFORMANCE! 4. OTHER TECH THAT WE STILL FIND ATTRACTIVELY PRICED AND RATE THEM WITH STRONG BUY RECOMMENDATIONS 1. AMAT $16.24 2.LU $3.73 3. CSCO $18.69 4. ACL SEMICONDUCTOR ACLO.OB .29 SPECULATIVE BUY RECOMMENDATION 5. SMTX $1.88 BEATEN DOWN EMS THAT HAS DONE A MAJOR RE-ORG AND IS SO BEATEN DOWN THAT UPSIDE POTENTIAL EXISTS FOR A JAN 05 POP AND A REV AND EARNINGS TURN-AROUND--COMPANY DOES AROUND $250 MILLION IN SALES WITH 19 MILLION FULLY DILUTED SHARES OUTSTANDING-ROUGHLY BRAKE EVEN FOR THE NINE MONTHS ENDING SEPT 30TH 2004. WORTH A LOOK AND SMALL PURCHASE FOR JAN 05 POP AND ADDITIONAL UPSIDE POTENTIAL IF COMPANY CAN GET IT TOGETHER AFTER ITS RE-ORG. 5. NON-TECH RECOMMENDATION 1.SCOR SA --NYSE SYMBOL--SCO---$1.93 AN INTERESTING COMPANY THAT PROVIDES TREATY AND FACULTATIVE REINSURANCE ON A WORLDWIDE BASIS TO PROPERTY CASUALTY AND LIFE INSURERS. SCOR OPERATES IN 19 COUNTRIES THROUGH ITS SUBS. THE COMPANY'S OPERATIONS ARE ORGANIZED IN 4 BUSINESS SEGMENTS: NON-LIFE, LIFE/ACCIDENT AND HEALTH, ALTERNATIVE REINSURANCE, AND CREDIT SURETY AND POLITICAL RISKS. THIS EUROPEAN INSURER HAS HAD A MAJOR TURN-AROUND AND THE STREET HAS NOT TAKEN NOTICE. FOR THE 9 MONTHS ENDING SEPT 30TH 2004 NET INCOME WAS EUR 54.3 MILLION COMPARED WITH EUR (-349) MILLION FOR THE SAME PERIOD OF 2003..SHAREHOLDERS EQUITY GREW TO EUR 1,463 MILLION AS OF SEPT 30, 2004 UP FROM EUR 704 MILLION ON DEC 31, 2003. DUE TO THE RE-ORG - WHICH CONSISTED OF REDUCTION IN GROSS PREMIUMS WRITTEN(REDUCE EXPOSURE TO HIGH RISK POLICIES), REDUCED HEAD COUNT, INCREASE EQUITY BY INCREASING SHARES OUTSTANDING WITH NEW INFUSION OF CASH. CURRENT BOOK VALUE IS EUR 1.69 AND EARNING/SH IS EUR .07 WITH 819 MILLION SHARES OUTSTANDING. I LIKE WHAT I SEE AND BELIEVE THAT SCO OFFERS INVESTORS AN INTERESTING OPP. BEFORE THE HERD JUMPS ON BOARD BECAUSE OF THE POSITIVE GROWTH POTENTIAL LONGER TERM. WE INTEND TO MONITOR SCO FOR % GAIN PERFORMANCE DURING 2005 HAPPY INVESTING! YOURS TRULY, WILLIAM VELMER EDITOR 1983 BELOW YOU WILL FIND NUMEROUS PORTFOLIO'S THAT S. A. ADVISORY.COM CURRENT MONITORS FOR PERCENTAGE GAIN PERFORMANCE: THIS PORTFOLIO CONTAINS THE TOP 28 INVESTMENTS THAT WERE PURCHASED DURING 2003 ENDING DEC 31, 2004:
OTHER PORTFOLIOS THAT WE CURRENTLY MONITOR: STOCKS RECOMMENDED FROM THE OCT 20TH 2003 EMAIL ALERT
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