November 1996

S. A. Advisory's Undervalued Hotline
1-900-990-0909 Ext. 192
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Market Comment

We called for a 6000 on the Dow during our Jan/Feb 1996 newsletter published on or about December 20, 1995!

We actually have been Bullish since the crash of 1987. We have looked for corrections, but have never turned bearish. We believe in America, but have a difficult time believing in our current governmental policies.

During June of 1996, we declared that our country was stuck with Clinton for four more years -- and guess what! A needed ingredient for our country, in order for real economic growth, is a capital gains tax cut to spur investment, growth and jobs.

We are all being taxed to DEATH. We have an economy that is growing by 2.5% - this is pathetic for the greatest country in the world. The Democrats believe that they have to take care of us. They feel that they should guide us like little children.

Motivate business to create real jobs with tax incentives, greater depreciation allowance, tax relief for new and developing technologies. We are not impressed with Mr. Clinton with his 10.5 million hamburger flippers that he speaks of so proudly with his slick grin.

He foams at the mouth with twisted verbiage about lower budget deficits, but has he forgotten that he inherited a coldwar dividend and, of course, slammed the largest tax increase down our throats in the history of the U.S. No, Mr. Clinton, it was not your wonderful domestic policies or even your directioness foreign RISK™ game that reduced the deficit, but instead, you blatantly stole from us. You are robbing the spirit that made us strong.

We believe that even though Clinton remains, the Dow will continue to power ahead during 1997 and would not be surprised to see 6700, but we may also see a 5000.

We remain focused, optimistic and fully invested in selective issues. We are extremely diverse domestically, as well as internationally. We continue to avoid IPO's, momentum stocks and fads.

Happy Halloween, Wm. Velmer

Portfolio Results
100K portfolio up 19.4% for our fiscal
900# portfolio up 63%
International Portfolio up 49%
Our last 6 years annual gain 18.45%/yr
Note: see complete results inside


(National Market NASDAQ ORBT)

Dramatic earnings turnaround solidly in place, disposal of non-profitable operations, solid balance sheet, core business growing - 1996 PE estimates look like a steal. STOCK SHOULD BE DOUBLE THE PRICE.

On October 15, 1996, our Super Fast Phone Services was informed to buy shares of ORBT @ $2.56 for short and long term gain.On October 16, 1996, our 900# investors were informed to purchase Orbit International ORBT.


Orbit Instrument designs, manufactures and sells customized electronic components and subsystems for military, and to a lesser extent, nonmilitary, governmental applications. Products include positional devices (ball trackers, force transducers and joysticks), data entry and display systems (computer controlled action entry panels, rear projection readout panels and manual entry displays), customized keyboards, plasma units and other specialized electronic systems. The Division also sells, on a repeat order basis, previously designed equipment, such as magnetic clutches, gear heads, indicators and differentials for console applications.

ORBT's products, which in most instances are designed to customer specifications on a firm order basis, are utilized in surveillance aircraft, missiles, torpedoes, nuclear subsystems, naval vessels, guidance control and ground console radar equipment.

Positional Devices

The Company designs and manufactures ball trackers, joysticks and force transducers which are incorporated into radar and sonar display systems. These devices enable an operator to move a cursor across a screen for tracking missiles, ships, aircraft and other moving targets.

Data Entry, Keyboards and Display Systems
Orbit manufactures a computer-controlled, action entry panel ("CCAEP") which provides a console operator with multiple displays of computer-generated data. The Segment's other data entry and display systems, digital data and manual entry units and panels are used in readout and switch panels located in fire control, sonar control and command communication consoles.

The Company also manufactures a family of keyboards designed to military specifications and has added to this product group, keyboards which include backlit and multifunction panels. These new keyboards have been sold for use in ships and aircraft.

Orbit has designed, and is selling, a low-power, lightweight, minimum-depth display unit providing output similar to cathode ray tube displays by utilizing AC plasma technology, a flat panel display technology. This technology eliminates bulk and space requirements of cathode ray tube displays, and offers improved visual resolution and lower power requirements at environmental extremes. The Division is currently under contract to incorporate the plasma display panels in display consoles for Aegis class ships.

Positional Readout Devices
Nuclear rod position indicators manufactured by the Orbit control and measure the depth of rods going into the core of a nuclear reactor energy source. The Division's rear projection readout devices provide operators with multiple sources of film stored display information capable of storing up to 48 messages per unit.

Graphic Display Terminals
The Company's family of graphic display terminals enables the operator to monitor and control a ship's radar and sonar systems and subsystems through the ship's central computer. The terminals are used throughout a ship as adjuncts to large display consoles. The modular design of these terminals facilitates applications on all size surface ships, submarines and aircraft.

Operator Control Trays
The variety of operator control trays engineered and manufactured by the Division help organize and present an influx of data created by interactive communications systems, making such data more manageable for operator consumption. The tray can be used for patrol and surveillance aircraft, standard shipboard display consoles, shore or mobile-based defense equipment and subsurface sonar displays. The Division's control trays are currently used in both naval service and operator simulators.

Plasma Flat Panel Technology
The Division has designed an intermediate sized display using AC gas discharge plasma technology. This touch sensitive unit allows interactive capability for communication between the operator and the host computer. Applications for this unit include weapons control, ships status, target recognition, air traffic control plus information exchange panels used in conjunction with image processing.

Proposed Products

Substantially all of the Division's efforts in the development of new products consist of design and engineering services associated with, and necessary for, the manufacture of new products. The Division generally begins development efforts after its customers have indicated that the proposed new products or improvements are desirable. The following is presently being developed by the Division; however, there can be no assurance that the Division's development efforts will result in any marketable products. The Division does not yet have any firm orders for products described below and there can be no assurance that any sales will be made.

The Division is expanding its design and development of AC plasma display panels to include bit mapping and graphics technologies. These next generation panels are intended to be used in aircraft and naval applications. The graphics version of the AC plasma display panel was completed in mid 1995 and the Division received contracts for these units on two separate programs. The Division has also been contracted to deliver a more advanced version of its panel with embedded intercommunication capability.

The Division has designed and developed a flat panel technology based communication panel. The Company has received prototype orders for these units for the LHA ship class. A flat panel development has been commenced for interactive color liquid crystal and Electroluminescent displays.


In February 1996, the Company, through its wholly-owned subsidiary, Cabot Court, completed the acquisition of certain of the assets, subject to certain liabilities, of Astrosystems and Behlman Electronics. Concurrently with the purchase, Cabot Court changed its name to Behlman Electronics, Inc. ("Behlman").

The military division of Behlman designs and manufactures power conversion devices and electronic products for measurement and display. The commercial products division produces high quality, distortion free commercial power units and low noise uninterruptable power supplies.


ORBT has successfully transformed itself from a hemorrhaging military electronics and apparel company with huge losses to a refocus military electronics company that has obviously downsized itself and returned to impressive profitability. It is estimated for the year ending December 1996 that ORBT will earn at least .34 from continuing operations (does not include 12¢ royalty payment) and .44 during 1997. At present ORBT's stock price in our opinion does not reflect the true current value or for that matter, any future potential. Orbit International trades on the National Market System of the NASDAQ and at this writing was selling for $2 9/16. Based upon 1996 and 1997 earning projections ORBT currently sports a very attractive PE multiple of 7.5x and 5.8x, respectively, indicating to us that dramatic upside potential exists today as well as during the next 12 to 18 months.

According to the latest 10K and 10Q filings, ORBT's management hopes to finish the divestiture of all apparel division by the end of 1996. Once this happens, ORBT will have in excess of $6.5 million in cash, which, of course, is intended to be used for acquisitions of complementary businesses.

At present there are only 6 million shares outstanding - management owns 2 million shares and recently has been buyers of shares in the open market - a very bullish signal. Institutions currently own another 800K - the remaining 3 million shares are held by the public - some 800 shareholders.

At present, the stated book value as of June 30th was 72¢. It is anticipated that by the close of 1996 the value will grow to 88¢. It should be noted that by year's end ORBT's cash will equal at least $1.00/share.

Investors should also realize that ORBT at the end of 1995 had a NOL (net operating loss carryforward) of $13.3 million, which expires in 2009, and a NOL of $2 million, which expires in 1999. Obviously, this size NOL will shelter a huge amount of tax liability during the next 12 years.

Upon comparing ORBT with peer companies, a very compelled picture surfaces. We basically compared ORBT to the average PE multiples of three companies that are involved with military business. Our first comparison dealt with earning for 96 or current fiscal year. We used GMH-PE-19.5x LGN-PE-18.6x and RTN-PE-13.1x. When we average them out, we calculated a PE average of 17 - during 1997 or the fiscal year, we calculated a PE average estimate of 15x

At present, ORBT trades at 7.5x 1996 and 5.8x 1997 estimates. If we were to assign certain conservative PE values that could and should be more suitable for the earnings that are estimated, one would see a dramatic difference in share price.

Let us first assume that since ORBT will grow by 10% over this year's revenue that we assign a super conservative PE valuation of 10 to ORBT. If that was the case, ORBT's estimated earning of .34 and .44, respectively, would yield a stock price of $3.40 and $4.40, respectively.

If we were to assign a share value based upon the average of our peer stocks of 17x and 15x, respectively, then our stock price of ORBT would be $5.78 and $6.60. If we were to assign a PE value of the SP 500, which is around 16x to ORBT, then our stock price would be $5.44 and $7.04, respectively.

Lastly, if we assigned a PE to ORBT based upon the estimated growth in earnings during 1996 and 1997 of 29% and used that value as a PE standard, then our price could approach $12.76.

Anyway you slice it, carve it, chew it, or digest it, ORBT in our opinion deserves to trade higher from current levels.

In summation, we have a NASDAQ listed turnaround situation, has ample cash, strong book value, solid earnings picture, insider buying, low PE, experienced management, large NOL, and most importantly, an under valued and under-followed situation.

For more information - broker contact: Mike Chesler at 1-800-331-1355; corporate contact: Mitchell Binder at 516-435-8300.



We informed our 900# Investors on September 27, 1996 to purchase shares in TRF @ $21.50 for percentage gain performance.

We cannot ignore Russia as an investment opportunity for the 90s and beyond. We have tried to play in the market with individual stocks, but find it extremely difficult. This is why we have chosen this vehicle which will allow us to benefit from this once-in-a-lifetime opportunity.

A small investment in Russia has the potential to 10 to 20x itself over the next 10 years. The real risk is to not participate. The Fund became effective during June of 1995. Templeton Russia Fund has around 5.3 million shares outstanding. As of September 30, 1996, the funds NAV/share equalled $19.01 - at present 75% invested in equities, while the remaining is in short-term money instruments. The majority of holdings in the Russian Fund are 50% energy related, 10% metals and mining, 20% consumer good, 14% telecommunication and the remaining 6% in other stuff.

A recent Bullish development for Russia results from S & P rating agency pegging Russian risk between double B minus and double B plus, which is on par with US corporate junk bonds, but ahead of Brazilian bonds and below the investment grade debt of Poland.

Mr. Yeltsin's health, of course, remains a wild card, but in reality, there is no turning back. There, of course, will be problems along the way, but some sort of hybrid democracy will take hold in Russia.

Other positives: inflation has dwindled and in August prices fell slightly for the first time since reforms began in 1992. The much-maligned ruble has appreciated somewhat in real terms. The country boasts a favorable balance of trade, and 70% of the economy is in private hands.

We are Bullish on Russia!
We are playing TRF for the long term.
Broker contact: Greg Nelson at 1-800-453-9408.

SNAKESnake Bits

1. As you may recall, our September 1996 newsletter featured HIA, Inc. (HIAI), a company that distributes turf irrigation equipment and commercial, industrial and residential well pumps and equipment. The company serves customers in the Rocky Mountain region. We initially recommended HIAI @ 7/16, an attractive price when one considers sales, earnings, book value, no debt and solid growth. The stock was received by investors with a BIG YAWN.

Recently HIAI released its nine-month sales and earnings ending August 31, 1996. Not only is the price of the stock about 40% cheaper than when we recommended it, but based upon the nine month results, HIAI is even cheaper than before. Currently, HIAI is offered at 25¢, a super steal for a boring company that will make money for the patient investor type who doesn't only have to buy tech stocks all the time.

For the year HIAI will probably have revenues of $16 - $17 million. Fourth quarter earnings will probably be a brake-even due to onset of Winter. So in essence, we have a company selling at a PE of 5, a PSR of .13 based upon estimated sales of $17 million, a book value of 27¢, no long-term debt and continued strong regional growth.

LOOKS AND FEELS attractive for the long-term investor type. We think that it is worth $.75 - $1.00. What do we know?

Broker contact: Mike Chesler at 1-800-331-1355.

2. American Education Corp. AEDU, developer and publisher of educational software, recommended @ $1.125 on or about June 18th, is currently back at the level - second quarter sales around $1 million and earnings of around 3¢ - third quarter due out any day - anticipated at $1 million in sales with earnings of 3¢. Long-term AEDU looks attractive.

3. Other attractive issues: SEQS, EuroDisney 2004 Warrants, EPLTF, EGLS, UTEK, TNGI, Shinawatra Computer and Communication, Wiltek, ALMI, ISSI, ISOL.

4. Shinawatra Computer & Communication (25 baht/$1.00 - Bangkok-Thailand - Symbol SHWXF - currency in baht) current price around 400 baht or $8.00/share ADRs - dramatically lower than our initial recommended price of $12.25 on or about 5-18-94.

Thailand's largest telecommunication conglomerate covering telecommunication services, satellite broadcasting services, broadcasting and the overseas telecommunication business. The group's main contributor is 58% owned subsidiary ADVANC, which is Thailand's number one mobile phone operator.

At current price of 400 baht, SHIN is trading at 30% below the sum-of-the-parts. 52 week range 400-712 baht - book value around US $2.75. Shinawatra owns 58% of ADVANC (mobile phone operator), 60% SATTEL (satellite transponder projects), and IBC - 18%, (broadcaster of subscription TV) Earnings/share in baht for 1996 and 1997 are 22.8 and 26 baht, respectively. Note: the ADR shares are actually half the size of ordinary shares.

Bottom line: one ADR costs around $8.00 - the earning/share in US funds equals around 40¢ for 1996 and 50¢ for 1997. SHIN, as well as the whole Thai market are having problems. The whole market is down around 27% this year due to political uncertainty and economical growing pains. In addition, margins are being squeezed by competition and government regulators looking for more income.


We intend to monitor another position of Shinawatra in our Global portfolio for percentage gain performance. For more information call Greg Nelson at 1-800-453-9408.

5. EuroDisney 2004 Warrants (franc currency - current price around 11 franc - warrants are exercisable and noncallable at 40 franc). Current price of warrants are 25¢ - shares outstanding as of June 96: 765 million.

While earnings outlook is still very difficult to assess, we still believe that EuroDisney is on the right track. Its costs are well under control and revenues for the coming two years should be boosted by two major events: its fifth birthday next year, followed by the World Cup the year after, which should bring more foreign visitors to Paris.

We still have seven years left for EuroDisney to work on our behalf. We see little purpose to buy the common shares. The warrants are our only interest, due, of course, to the tremendous leverage that is attained. If Mickey is going to survive, the warrants should do the trick with a very small investment. Consider this: 1000 shares of common cost around $1.75 - $2.00, or $1750 to 2000. If we purchase 10K of the warrants at 25¢, our cost is $2500. The current exercise price is around $6.75.

If everything imaginable for the Magic Kingdom turns to gold by the year 2004 and our common shares are worth $10.00, our investment would have appreciated 400%. If this scenario unfolded, our warrants would have to be worth around $4.50 or a 1700% appreciation.

You can see that the leverage is extraordinary - minimum risk for ultra maximum return potential.

We are not professing that this could or would happen by the year 2004, but other scenarios could develop and profits may emerge. Our initial visit to EuroDisney @ 12¢ appreciated to 75¢ within six months. This could happen again.

The Mouse could roar again. For more information call Greg Nelson at 1-800-453-9408.

In order to stay in line with SEC guidelines, S.A. Advisory may buy, hold or sell positions in all securities recommended. The portfolios are all hypothetical in nature. It is likely that all recommendations were purchased prior to the recommendation. We may buy additional shares or may sell shares at any time. S.A. Advisory's portfolios are geared towards sophisticated investors aiming for long-term capital gains. Our trading habits may vary at our own discretion. Most recommendations are based upon strict fundamental analysis. Usually revenue and earnings EST for low priced common stock result from management discussions.

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