|Nov - Dec 1997|
New Buy Recommendation
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We have to laugh at the attitude that investors, brokerage firms, the SEC & NASDAQ and, of course, the companies that trade either on the OTC BB or the "PINK SHEETS" have towards this huge group of investments opportunities! The brokerage firms avoid them like the plague, the investor is afraid of them, the SEC and the NASDAQ try to make them invisible and many of the companies that fall in this group are equally clueless; that is, they allow us to steal their shares at fire-sale prices! In our opinion, the only group of stocks that are relatively RISKLESS are the "pink sheet" and the OTC BB's. The group is so underfollowed, unknown, undervalued and hated, that for us at http://www.saadvisory.com there actually exists no risk!
Before we introduce to you our latest gem, consider this: on or about July 9, 1997 in our July-August 1997 newsletter we introduced a number of investment opportunities - one of them was Diversified Corporate Resources (Pink sheets-HIRE - one could not pull up a quote on this situation - you must have a brokerage firm get you a quote). At the time of the recommendation the stock was $5.00 - relatively invisible to the average investor type. Well guess what? HIRE is now $9.00. A regional brokerage firm managed a secondary and raised them $12 million. It now trades on the AMEX at $9.00 (HIR)
S.A. Advisory - E-mail Update September 24, 1997
Lynton Group, Inc. (PINK SHEETS - LYNG) You cannnot gat a quote on this issue on the machine at present and because of this scenario - this stock is STEAL - check it out!!
The company is fully reporting with the SEC and all Documents are filed electronically on Edgar. In order to look it up you must Spell the name out properly: Lynton Group, inc. or you may find it under the word Lynton. You must use capital "L" for Lynton.
Is all of this worth the bother?
Lynton Group, Inc. The company was formed in 1971. The company performs aviation sales and services for international markets. Services provided by the company include the management, charter, maintenance, hangarage and refueling of corporate helicopters and fixed wing aircraft. In addition, the Company's sales operations perform aircraft sales and brokerage services to customers located in markets throughout the world. Operations are split up between the US and the United Kingdom. At present there are 6.3 million shares outstanding and the float is only 600k.
WHY WE LIKE IT!!
For the 9-months ending June 30th sales expanded from $16.9 mil to $18.5, while net income exploded to $729k from $132k. This value equalled .11 from operating income. It is estimated that for the year ending September 1997 sales will reach $27 million and net-income/sh will come in at least .15/share from operating income. At the current price of Lynton shares, that is around .69, the estimated PE for year ending September 97 is only 4.6X. It is going to throw off at least .40/share in cash flow/share ending September 1997. At present Lynton is trading at less than 2X cash flow. The Book Value is around .70 (half is goodwill) and based upon its PSR, Lynton Group only trades at about 15% of sales. All the fundamentals indicate to us an extremely undervalued, underfollowed, obscure and unknown investment opportunity that is a screaming buy!
If Lynton Group, Inc. was to trade even at very conservative multiples, this stock in our opinion would trade at much higher prices. If Lynton was to trade at a P E of say 10X, then our stock would trade at $1.50. If Lyton was to trade at 3X Book, then the shares could be worth $2.10. If it was to trade at only 50% of sales, then Lynton would trade at $2.00 and if Lynton was to trade at 5X cash-flow, its share price would be at least $2.00.
Any way you slice it, carve it, chew it or laugh at it, this situation is a screaming BUY! We belive that management will eventually sell the company at much higher prices or do somthing that will enhance the value of its shares. As mentioned, this situation is not for everyone and only investors who BUY really cheap stocks will appreciate the merits of this unloved, unknown, undervalued situation. The two market-makers in this issue at present are Carr Securitios and Paragon Capital. Broker contact: Mike Chesler 1-800-331-1355. Corporate#: London -011-44-189-583-5000, US#: 201-292-9000
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