S.A. Advisory E-Mail Update

Aug 04, 1998

Dear E-mailer's: http://www.saadvisory.com

The uglier the market gets the more we like it! The overall market in our opinion has been in a BEAR market for quite some time--the only positive side of the market has been the Dow and S & P 500. We will continue to search out cheap and undervalued opps either in the mini-micro or mid-cap arena.

The most difficult thing for investors is buying stocks when they are really cheap--most of time cheap means stocks that are out of favor--one must be long term oriented for the largest gains.

We at www.saadvisory.com have always had our greatest success when the herd runs for hills.. If we purchase an opp. that falls in price we do not hesitate to add to our position. Proper investing is done by building a position in a stock over time and then waiting for results.

As you know www.saadvisory.com is strictly fundamental in our stock selections; ie. PSR, PE, P/B, P/CF and levels of debt and shares outstanding.

The market is obviously having a difficult time at present--the key is not to PANIC!!!!


The Oil patch has not been of interest to us for over 10 years because we couldn't buy them cheap enough!The price of oil/bl is around $13.50,while

natural gas is at around $1.80/tcf. Quality oil issues are 50% to 75% off recent highs and that opportunities in the group appear very favorable over the long term.

1. Key Energy Group,Inc. (KEG) current price $10.69

52-wk range--$9.875-$40.00

The company provides a full range of maintenance and workover services to major and independent oil and gas companies in the U.S. and Argentina. The company operates 830 well service rigs, 700 fluid hauiling and other trucks and 63 drilling rigs.

Book value around $8.03 shares outstanding--18,300,000

Over the past 21-months, the company has been the leading consolidator of this industry, completing 45 acquisitions of well servicing and drilling operations through March 31, 1998 and 46 such acquisitions through May 13,1998. This consolidation has led to reduced fragmentation in the market and a more predictable demand for well services for the company and its ccompetitors.

For the nine months ended March 31,1998 sales reached $306 million and net income/share $1.15(basic). For the year ending June 1998 income/sh anticipated at $1.25 fully diluted. KEG currently trading at an est. PE of 8.5X for 98. Appears to be super cheap and we rate KEG as a strong BUY for long term investors. This situation is 75% off its recent high--the institutions have dumped it because the group is currently out of favor. It is if oil prices will never reach $20 again!! PSR and P/B are also mouth- watering!

We like this situation and again rate it a STRONG BUY at current levels!

We intend to monitor this opp. for % gain performance.

Broker contact: Greg Nelson 1-800-269-9460..

2. Apache Corporation (APA) NYSE current price $25.75 Apache is an indepent energy company that explores for, develops, and produces natural gas, crude oil and natural gas liquids

52-week range---$24.56--$45.

Book value-- $19.27

shares outstanding--98 million

Dividend .28

Net income/share for yr ending Dec 98 est. .81, while est. for 99 equals $1.49.

Net sales for 98 est. @ $1.095 billion and $1.275 billion for est. 99.

Cost/barrel of oil $3 vs $3.30 last year.

Total reserves--$2.56 Billion

In our opinion APA has very attractive PE est., P/B, P/CF and PSR. Currently trading almost 50% below recent high. Super Quality oil and gas company!

The company's exploration and production interests are focused on the Gulf of Mexico, the Anadarko Basin, the Permian Basin, the Gulf Coast and the Western Sedimentary Basin of Canada. Outside of North America, Apache has exploration and production interests offshore Western Australia and in Egypt and exploration interests in Indonesia, offshore The People's Republic of China and offshore trhe Ivory Coast.

See recent press release dated August 3, 1998!! The company just reported a new discovery.

Insider BUYING!

First quarter 1998 oil production increased 24% .

The cash on hand at the end of 1st quarter was $120 million. The available borrowing capacity under its global credit facility was $774 million.

This is quality at fire-sale prices. For the long term investor APA offers excellent upside potential with limited downside. Trading close to 52 wk low of $24.56.

Should own a position in APA --We intend to monitor APA in our portfolio for % gain performance (e-mail portfolio).

broker: Greg Nelson -----1800-269-9460

3. Helmerich and Payne,Inc. (HP) NYSE Current price--$20.18

We have featured this opp in our last e-mail..

HP explores, produces , and sells crude oil and natural gas, and engages in contract drilling of oil and gas wells for others. HP also owns, manages and develops commercial real estate properties.

Book value--$16.27

BK includes stock holdings of $100 million .

Owns many buildings in OK.

Has ZERO debt!

Shares outstanding--50 million


52-week range--$$20.50-$45.56

Est. income/sh for fiscal 98 ending Sept $1.57--fiscal 99 est. $1.75

Everything about HP we love!! This stock at current prices is a STEAL! The real risk is not owning some! Major BUY Recommendation at current levels! As mentioned we intend to monitor this situation in our e-mail porfolio for % gain performance.

Broker: Greg Nelson--1-800-269-9460

The next situation belongs in every mini-micro cap portfolio!!!!


PCSH is a retailer of building materials and home improvement products in the United States. PCSH operates 164 retail stores in 20 states.

Recent price: $2.25

52-week range $1.00-$5.75

shares outstanding--20 million

Book value---$8.00

Market-cap--$45 million

Total sales est. for 1998---$2 Billion

For second quarter just released July 14th 98 sales reached $500 million and net income/sh equalled .04---We believe that a turn-around is in motion since emerging from chapter 11.

Recent weakness in stock price due to release of 800k shares of additional stock because of chapter 11--released around June 28th--should almost be played out.

Show me another company with a market cap of $45 million and sales of $2 Billion--also trading for about 70% below stated book.

We initially recommended PCSH @ $2.125 and sold half at $4.00--currently at $2.25 and in our opinion is extremely attractive and should not be over looked. We rate PCSH with a STRONG BUY RATING!

AS mentioned- we will monitor pcsh for % gain performance.

Broker: Greg Nelson: 1-800-269-9460

An old micro-mini cap:

Industrial Technologies,Inc.. (inti)

The company designs, assembles and markets automated surface inspection systems, electro-optical sensors, laser based equipment and industrial computer and peripherals.

We first introduced inti on 7-09-97 @ .18

We have waited for a long time for sec filings; Well they are finally here and current!

For the nine months ending June 30th 98 sales reached $5.2 million with net income $268k. Based upon 5,750,000 shares outstanding earnings/share equals .046..Impressive for a stock selling at 3/16. As of July 10,1998 the company's backlog was $3,100,000.00 vs $1,600,000.00. At present the book value is negative by around $1 million--the company wrote-off the goodwill!

In our opinion, inti for .18 looks very cheap when one considers the net income/share of .046!! What do you think?

broker: Michael Chesler--1-800331-1355

Note: We have positions in all investment opp mentioned in all of our newsletters and e-mails.. Our trading habit vary! We may buy and/or sell anything we wish at any time. Our revenue and earnings est. are from management, our actual numbers are from sec filings and other est. are generated from major brokerage firms that monitor said investments. Please review all sec filings before investing.

Our most valuable service is our super-fast phone service! We call you via telephone and give you the "new" recommendations before they are released to our e-mail subscribers. At present our phone service is $450/yr, which also includes the newsletter( WE CALL YOU).. For $1000.00/yr we call you and YOU CAN CALL US!. Price increase as of Sept 1, 1998. For more information call 1-801-272-4761.

We would appreciate if our e-mail subscribers would take advantage of the "free" offer for Investor's Business Daily newspaper located on our Home page!! It helps us control costs of our free service!! Check out the ZACKS offer as well!

Yours Truly, William Velmer http://www.saadvisory.com _____________________________________________________________ SUBSCRIPTION INFORMATION: To subscribe or unsubscribe to the S. A. Advisory E-mail Newsletter, simply direct your web browser to http://www.saadvisory.com/update/ And don't forget to tell a friend about our FREE services _____________________________________________________________

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