S A ADVISORY Nov - Dec 1997
New Portfolio


Asian Flu Portfolio

The baby, bath water and the highest of quality stocks are out the window. The five listed stocks below were purchased on or about October 30, 1997, and will be monitored in this portfolio and our 888# and E-mail portfolio for percentage gain performance. In 3 - 6 months' time, we believer that the securities listed below will have appreciated handsomely for the scared-to-death investor.

Brief on each selection

  1. Applied Magnetics (APM) - a leading independent supplier of magnetic recording head components for rigid disk drives found in computers. Earning estimate for fiscal 98 around $4+ (hard to believe), even if it is half that number APM is still very attractive (value line had it at $4.75). LTD - $115 million - book est. $9.59, 24 million shares outstanding cash/share around $7.10, estimated cash flow/98 equals $7.40 - even if it is half that value. This situation is a super bargain. During July, 1997, APM was $34/sh. Estimated revenues for fiscal 1998 equals $650 million. Any investor looking for a high quality core holding relating to the computer complex has to won APM for the long term as a core holding. This is a no-brainer. Corporate # 805-683-5353.

  2. Applied Materials (AMAT) develops, manufactures, markets and services semiconductor water fabrication equipment and space parts. A true world leader. Has been beaten down from an adjusted 52 week high of $54 to an attractive level of $33/sh. Estimated earnings for fiscal 1997 are $1.37/sh. Still a bit rich, but we are ready to average down if we have not picked the bottom within 10% - 15%. Book value around $7.33 and cash of $3.00. Long term debt is low. At present, 364 million shares outstanding. Growth has been tremendous and we anticipate that the Asian meltdown may cause near term weakness, but over the long term, this opportunity is a star. Corporate # 805-683-5353.

  3. Spectrum Corp. (SPCT) designs, manufactures and markets highly linear radio frequency power amplifiers that address the needs of wireless infrastructure equipment suppliers and their service provider customers. When you consider where this opportunity has been and what assets, sales and earning SPCT has, one has to wonder if the professionals that are dumping this opportunity need their heads examined. The company has in excess of $10 in cash and a book value of over $14 and earnings, even though reduced to around $2.32. SPCT has no LTD and only has 10 million shares outstanding. From its high, it is trading 66% below the peak of $66/sh. Sales are estimated to slow somewhat near term and some contracts with Nortel are questionable, but this slaughter is way overdone to the super charred level. We believe that for investors looking at 3 - 6 months that a 50% appreciation is not a pipe dream. Corporate # 408-745-5400

  4. Sun Microsystems, Inc. (SUNW) is a lending supplier of the network-based distributed computing systems, including work stations, severs, the UNIX operating system, and productivity, software, for both commercial and technical applications. At present SUNW trades at only $8 above it 52-week low or 40% below its 52-week high. Estimated earnings for fiscal 98 ending June are $2.30, book value $7.41, cash $3.00 and LTD only $107 million. SUNW is estimated to reach sales of $10 billion, a 15% growth rate over 1997. Should trade at least at around 20x. A premier discounted for earnings and the Asian Flu. The street usually wrong and because of this, an imperfect market is allowing astute investor types the opportunity to steal SUNW at bargain basement prices. Corporate phone #415-960-1300

  5. Templeton dragon Fund (TDF) - a closed-end mutual fund run by famed Mark Mobius. This fund in our opinion will give us exposure in Hong Kong, China , and the rest of Asia Pacific. Has been beaten down by idiots. Mobius admits on October 29, 1997 that he was trained by famed "Sir John Templeton". On October 27, 1997, TDR, announced that the board authorized the buy back of up to 10% or 5.4 million shares. He also states that assets exceeded $986 million. Asia caught the flu, but by purchasing TDF at current levels with time will afford you a long-term vacation on the beach.. We love this issue and currently hod a sizeable position in it.

Broker contact for all five of these issues: Greg Nelson (22 years in the business) at 1-800-269-9460

              Recommended Current Stock

Company              Symbol    Price     Price    Range   Status

                                                          52 Week

Applied Magnetics      APM      $22.69   23       $18-60   B  

Applied Materials      AMAT     $33      33 3/8   $12-54   B

Spectrian              SPCT     $22.75   23 1/2   $7-66    B

Sun Microsystems       SUNW     $32.94   34 1/4   $25-53   B

Templeton Dragon Fund  TDF      $12.25   12.81    $11-18   B														

Back to top | Back to Newsletter

Copyright © 1997 S.A. Advisory