Bull & Bear's Top Stocks To Watch

THE CONTRARY INVESTOR
309 South Willard St., Burlington, VT 05401.
Monthly, 1 year, $125.

       Todd Wulfson: "Newell Rubbermaid (NYSE NWL $22.50, www.newellco.com) is a manufacturer of branded consumer products. Through several acquisitions, Newell has assembled some of the best-known brands in storage containers, plastic specialty, hand tools, cooking ware and writing utensils. Its brands include Rubbermaid, Sharpie, Paper Mate, Parker, Roughneck, Calphalon, Little Tikes, Graco, Levolor, Vise-Grip, Quick-Grip, Brute, Stain Shield, Blue Ice, TakeAlongs, Kirsch, Shur-Line, BernzOmatic, Waterman, Colorific, Goody, Irwin, Lenox and Marathon.
       In the mid-1990s the company was very successful in integrating acquisitions and realizing all the available synergies. Someone even coined the term "newellized" as a verb describing the act of making a successful acquisition and integration. Then in 1998 the company bought Rubbermaid for $5.8 billion in stock. The expected synergies were never realized and the value of the company today is just more than half what it was immediately after that merger five years ago.
       After struggling with the integration of Rubbermaid for three years, management had lost is credibility. In 2001 Joe Galli was hired as the new CEO. Galli, now 44, had worked at Black and Decker for 19 years, rising to President of the power tools division before doing short shifts as President of Amazon.com (1999) and CEO of VerticalNet (2000). Galli came in with big plans for the reorganization of Newell. Some believe he has tried to do too much too soon. In any case, investors have already grown skeptical of Galli because to date he has not delivered on his promises.
       All the same, the company continues to position itself for long-term growth by divesting some businesses and acquiring others. In January it added the Lenox brand line of tools. To improve operations the company is reducing the number of items it sells. SKUs (stock keeping units) have shrunk by 54,000 since 2002, a 21% reduction. Much of this was achieved through a reduction in the lowest margin items. A strategic decision was made in Q4 of 2002 to exit "high risk" retailers such as Kmart. The move may make sense in the long run but has hurt sales in the short-term.
       Through all the turmoil Newell has consistently made money. After earning a record $1.94 per share in 1998, its earnings reached an 8-year low of $1.20 per share in 2001. The dividend is $0.84 per share and appears safe. Debt is at 53% of total capital (interest coverage is 4.3 times) and may need to be reduced to maintain current credit ratings (BBB+). Newell sold $200 million of stock in January 2003 at $30 per share to help pay for its acquisition of Lenox. That issuance put pressure on the stock, which then took a further hit in July when the company guided earnings down, projecting $1.60 to $1.68 for 2003 EPS.
       We think the market will start to look more favorably on Newell in 2004. The shares trade at 8.5 times cash flow with just under a $1 per share in free cash flow. If some of Galli's initiatives don't bear fruit soon Newell may have a new CEO. Either way, the stock should rally.
       Catalyst: Evidence of positive results from the current regime, or a regime change. Target: $30 in one year."

SUPERSTOCK INVESTOR
1900 Glades Rd., Ste. 441, Boca Raton, FL 33431.
Monthly, 1 year, $395.

       Sven Monberg: "Newell Rubbermaid (NYSE NWL) is most likely oversold, trading under $23. After more than a decade of making well-planned acquisitions that helped to generate an average annual total return of about 23% comfortably ahead of the major stock market indexes the inevitable happened. In 1998 Newell agreed to use $5.8 billion worth of its own currency, i.e., its common stock, to buy Rubbermaid. At that time, the combined stock market values of the two companies totaled $12 billion. Today, at around $22 a share, Newell Rubbermaid is worth about half that. It appears that through the Rubbermaid acquisition it stumbled pretty badly. But the way I look at it, this may be an opportunity to "strike while the iron is cold."
       Newell Rubbermaid has an excellent portfolio of brand names that have been steadily profitable, if relatively slow growing.
       Management's 2004 operating earnings guidance is now in the $1.60 to $1.68 range and the stock is currently trading at slightly over 14 times those estimates for 2004, which is toward the lower end of its historical trading range.
       One point that the bears in the stock can't ignore is NWL's cash flow for fiscal 2003 that should be in excess of $700 million. However, free cash flow in this case is a tough argument for the bears in the stock to get around. NWL's ability to generate free cash flow should really help to attract investors back into the stock if, during the next couple of quarters, current management can demonstrate an ability to get earnings back on track, and the economy plays along. Free cash flow is operating cash flow less capital expenditures and dividends. Free cash flow improved to $162.6 million during the third quarter, helped by a $94 million decline in inventories. Management expects free cash flow to be around $200 million to $250 million for fiscal year 2003. NWL also indicated its expectations for 2004 free cash flow of $225 to $275 million. Most analysts following NWL believe these free cash flow numbers are attainable, thus the $0.84 dividend appears to be quite secure. At a market value of $22.80, that's a 3.67% return. Not a bad income return in this marketplace while we wait for better earnings to kick in over the next several quarters.
       Jim Cramer, who I consider one of the few high profile market commentators I'd characterize as a clear thinker when evaluating a company's business health, believes Newell falls into a category of enterprises that aren't big enough to go it alone in a world where you need giant scale. In reference to NWL, he believes management can't keep messing up, and must put points on the board with respect to the turnaround or be ousted. That is one of the qualities we look for in attempting to spot recommendations for Superstock Investor an alternative way to win beyond an earnings recovery.
       Robert Barker in Business Week puts it simply: that Newell management should be able to squeeze greater returns for shareholders out of a long-established company with familiar brands, strong operating cash flows, and a manageable balance sheet total debt is about half of capital. This is a far less daunting endeavor than, say, inventing and selling the next-generation cell phone. The dough, in other words, is already coming in the door, with common equity at $22.80 per share that trades for about 0.8 times sales and approximately 13 times Wall Street's most bearish estimate of next year's earnings. Mr. Barker's advice: "Get 'em while they're cold."

LOOKING FORWARD
published monthly by Friess Associates for clients and Brandywine Funds shareholders.

       Chris Aregood: "It's not surprising that Wall Street underestimated Staples (Nasdaq SPLS) in each of the past seven quarters considering that the company's profitability has been such a moving target. Fortunately for Staples shareholders, that target keeps moving higher and higher Staples achieved its best-ever operating profit margin in its most recent quarter.
       Staples opened the first office-supply superstore, creating a concept that's been repeatedly mimicked in the years since. Today, Staples is the industry leader with more than $12.4 billion in sales from about 1,500 superstores in North America and Europe, and the company is setting an example through customer service and operating efficiency, that will be tough for the competition to emulate.
       Revenues jumped more than $500 million, or 18 percent, to $2.9 billion in a July quarter marked by strong demand here and abroad. Record operating margins helped Staples exceed earnings estimates with 38 percent growth. Upon announcing these results, Staples informed analysts that their expectations for the final six months of the company's fiscal year were too low.
       Your team spoke to Chief Financial Officer John Mahoney about the innovative way that Staples is known to reach out to business customers to build broad, lasting relationships. For example, Staples representatives work with business customers to streamline supply purchases and offer delivery options that eliminate the need for companies to stockpile supplies. The company also mines its database to identify order patterns that point to sales leads, such as a customer that buys only copier paper that might be interested to learn about toner cartridges.
       Your team bought Staples at about 18 times earnings estimates for the company's fiscal year ending January 2004. Wall Street predicts the company will finish the fiscal year with 22 percent earnings growth."

       Dan Sullivan: "It's tough to be an airline these days. Increased fuel costs, competition from regional carriers, corporate-cost cutting that has translated into a reduced pool of business travelers and the devastating September 11 terrorist attacks have thrown the entire sector into negative territory. Innovative carriers, however, are restructuring and rebounding.
       American Airlines (AMR), the world's largest carrier with passenger service to more than 152 destinations throughout North America, the Caribbean, Latin America, Europe and the Pacific, embarked on a corporate turnaround. Many positive trends within the sector and with American Airlines specifically have occurred during the third quarter. It recently earned the title of North America's Leading Airline by the World Travel Awards for the sixth straight year and also was bestowed with the World's Leading Economy Class Award. And, in conjunction with ATA Airlines, AMR also recently announced interline electronic ticketing.
       E-ticketing has become a convenient and cost-effective solution for the industry. Nearly 90 percent of all American Airlines customers today travel on electronic tickets. Many carriers are posting profits for the first time since the beginning of 2001. On October 23 it announced third quarter earnings of $1 million compared to a loss of $924 million a year ago. On a per-share basis, the results were breakeven versus a $5.93 share loss in the earlier period. Revenue rose 2% to $4.61 billion. The results reflect a 20% reduction in labor costs after winning concessions from unions and other employees in April. The project cost savings are expected to total 1.8 billion a year."

TECH STOCK INSIGHTS
1200 Fifth Avenue, Suite 625, Seattle, WA 98101.
Monthly, 1 year, $275.

       Randy Williams-Gurian: Wireless Age Communications (WLSA.OB), in Canada is another way investor can play a pick up in mobile communications. Wireless Age Communications is a company that has tremendous potential and one that is probably most appropriate for only our most risk tolerant subscribers. TSI recommends subscribers only commit 1 2 percent of their total portfolio to this relatively new company.
       WLSA is building a comprehensive global distribution network for wireless devices, accessories, and services as part of its plan to capitalize on the ongoing growth in the wireless sector. As part of that strategy, the company plans to acquire proprietary brand name products and introduce them into existing distribution channels, and the to expand those distribution channels and profit margins. WLSA.OB began this process with the acquisition of approximately 90 percent of Wireless Age Communications, Ltd. ("Wireless Age") and Prime Wireless, Inc. ("Prime"), two companies that provide the base and infrastructure to enable the company to expand and grow.
       Wireless Age Communications generates revenues from the sale of cellular phones; the sale and rental of two-way radio devices; the installation and sale of wireless systems to corporate and institutional clients; the sale of pre-paid cards and accessories; activation fees; and by receiving a percentage of the cellular bills of subscribers it activates. Wireless Age Communications is quickly making a name for itself in the mobile communications market.
       Run by CEO John Simmonds, Wireless Age is on track to deliver $20 million in revenues over the next year. More importantly, the company's strategic direction calls for acquiring other assets that will allow Wireless Age to leverage its existing manufacturing and distribution networks. TSI expects great things from Wireless Age Communications. TSI thinks Wireless Age shares could double from current levels over the next 12 18 months. Buy at or below $1.65. We are setting a one-year price target of $5.40 a share and a stop-loss at $1.00 a share."

Nate Pile: "For the quarter, Apple Computer (AAPL) posted a net profit of $44 million, or $0.12 per diluted share, on revenues of just over $1.7 billion. In the same period last year, the company reported a net loss of $45 million, or $0.13 per share, on revenues of $1.44 billion. Along with this respectable earnings report, the company also unveiled iTunes for Windows users this week. While it remains to be seen exactly what sort of fruit this venture will ultimately be able to produce, the growing popularity of the iPod across a wide variety of demographic groups certainly suggests that Apple may finally have found a viable way to tap into the minds of Windows usersand as time goes by, it would not surprise me at all to see a number of these Windows users start to migrate over to Apple as their supplier of "devices for the digital age" (especially if the iTunes site offers frequent users the ability to earn rebates on Apple products, for example). Further strengthening my belief that Apple is on its way to scoring a win in this round of "the great digital progression," the company also announced that it has signed an agreement with tiny Audible, Inc. (ADBL.OB $2.03) to share Audible's library of roughly 5,000 books and other spoken word products through the iTunes site. In addition, the company also signed an agreement with Time Warner's (TWX $15.58) AOL division to make it easier for AOL users to access the iTunes service. To help promote this major step forward for the company, Apple has entered into a rather substantial promotional campaign with Pepsi (PEP $47.88). As a result of the continued progress being made by the company when it comes to setting the pace in the race towards "the next great thing," I am significantly increasing the Aggressive Portfolio's position in this stock this month. AAPL is a strong buy under $21 and a buy under $25."

INVESTOR'S VALUE VIEW
2240 Winter Woods Blvd., Ste 1010, Orlando, FL 32792.
Monthly, 1 year, $95.

       R. Scott Pearson recently focused on America Movil (AMX), the leading provider of wireless services in Latin America.
      "America Movil was established in September 2000. From its beginnings as a spin-off from Telefonos de Mexico, AMX now has subsidiaries throughout the South American continent, as well as in Europe and the United States of America. Affiliates of America Movil can be found in Guatemala, Argentina, Columbia, Venezuela, Brazil, and Spain. In its home country of Mexico, America Movil provides telecommunications for over 85% of the population, covering over 30% of the geographical area. Services include fixed telephone lines and cellular networks for wireless lines.
      AMX reports paying $625 million to acquire control of Brazilian wireless company BCP. BCP's subscribers numbered over 1.5 million people, and its service covers an area which boasts 19.2 million people in metropolitan Sao Paola. AMX now owns 5 mobile operators in Brazil. Joining all 5 operators under the brand name Claro, America Movil is currently the 2nd largest mobile provider in Brazil after Vivo.
      AMX's first quarter report was exciting, with a 45% increase in revenues. This resulted in a 52% rise in profits. The company also recently purchased another 20% of Conecel. Conecel is the fastest growing unit of America Movil, therefore it was a logical step to purchase these shares.
      Currently America Movil boasts a subscriber list of 36 million subscribers, and holds a dominant share of the market. With such a large subscriber base, the company has managed to drive cellular giants Verizon and Vodaphone both of whom sold off their shares of Iusacell to a local provider out of the market. In the first half of 2003, revenues totaled more than $185 million. America Movil is also making moves toward the cellular market in Argentina, which should provide to be a good opportunity for this up-and-coming corporation."

OTC GROWTH STOCK WATCH
300 Chestnut St., Ste. 200, Needham, MA 02492.
Monthly, 1 year, $299.

       Geoffrey Eiten: "Positive signs in the markets led by huge liquidity in the secondary markets, make my forecast for the future in small cap stocks extremely optimistic.
       One of the biggest problems that occurs in a bear market is the fact that the volume in small/micro cap stocks totally dries up. This is because institutions that invest in this sector of the market have stopped doing just that making investments in companies that are the future of America.
       This liquidity phenomena, if it should continue, and I think we have just started, should propel the market to new highs over the next couple of years. Hopefully, lessons of the past will prevail over the over evaluation of stock markets past.
The cleansing of the financial markets by regulatory bodies and the corporations behind them will only add to the creditability of the value in the markets in the future. The difference this time around will be that the averages will actually warrant their valuation and their eventual record highs.
       This month's recommendation, Curative Health Services (Nasdaq CURE www.curative.com) has recently taken a beating from $19 down to $13. (I think way over done). CURE provides pharmacy products and services for patients with chronic and critical diseases. The "CURE," for the stock's ailment would be for us to buy shares at these discounted levels. We believe that the stock price should be back to $19 in the next 3-6 months."

THE ALEXANDER PARIS REPORT
161 N. Clark St., Ste 2950, Chicago, IL 60601.
Monthly, 1 year, $195.

       Alexander Paris: "Callaway Golf Company (NYSE ELY), based in Carlsbad, California, designs, manufactures and markets high quality, innovative golf clubs, golf balls and other golf accessories. Their products include, Odyssey putters, Callaway golf balls and clubs marketed under the Big Bertha and other brands. Callaway is the leading manufacturer for drivers, fairway woods, irons and putters.
       Callaway announced that it won in the auction to purchase substantially all the assets of Top-Flite Golf Company. The proposed sale is expected to be submitted to the U.S. Bankruptcy Court in a hearing scheduled for 12:30 EDT today.
       The final purchase price has not yet been disclosed. Callaway's bid going into the auction was $125 million, with Adidas-Salomon AG having entered a higher bid of $126 million before the auction. Presumably, the winning bid was something over $126 million. We've seen some speculate that the bidding likely began at $135 million.
We've felt the acquisition was an important one for Callaway and its failure to win the auction would have been perceived as a negative since it was the vehicle for Callaway to eliminate its ongoing losses in the ball business. Depending on the bid price, it could still be a short-term negative, but we still view it as a likely long-term positive. With the consolidating golf industry, we believe the winners will be the companies with broad product lines, with balls being the most important addition for Callaway after clubs.
       While we don't have all the information, Callaway management has stated that if the acquisition was completed in September, it would have time to complete the integration of the operations of the two companies by year-end and would be able to substantially reduce its ball losses in 2004 as promised.
       Callaway had announced earlier that there would be a largely non-cash $70 million charge related to the transaction, which we presume was mostly good will. With a higher purchase price, we expect the charge to simply be larger without affecting operating earnings.
So, until we have additional information, we are staying with our current estimates of $0.98 and $1.21 per share for 2003 and 2004, respectively. Importantly, our 2004 estimate, which has been higher than the Street, already assumed Callaway would be successful with its acquisition and ball losses would be largely eliminated. In fact, 2004 earnings would likely be modestly higher than our more conservative estimate if the full ball loss were eliminated.
Whatever the final price, we view the Top-Flite acquisition as an important strategic acquisitions and, as such, it significantly enhances the company's long-term outlook. Speaking of the long-term, we still believe the demographics are positive for the golf industry and will begin to start showing through with a more positive economy in the period ahead and a resolution of some industry problems.
       Callaway should be able to pay for much of the acquisition out of cash, but with a recently closed new credit line, we presume it will pay for all, or a good part, of the acquisition with debt.
       We are maintaining our Outperform rating and view Callaway as a very good investment value, with the potential of it again becoming a growth stock in the future."

UPSIDE
monthly supplement to Dow Theory Forecasts
7412 Calumet Ave., Hammond, IN 46324.

Richard Moroney: "In an era or rapidly rising health-care costs, Sierra Health Services (Nasdaq SIE $24) helps its customers manage. The company, a leading provider of managed-care programs, has seen its shares nearly double in 2003 on the strength of earnings momentum and solid industry fundamentals. Sierra comes with some risks and could be volatile. But its strong market niche, impressive growth potential, and modest valuation qualify the stock as a top pick. Sierra is rated Best Buy.

       Headquartered in Las Vegas, Sierra provides managed-care benefit plans to employers, government programs, and individuals. The company operates HMO and PPO plans, offers insurance, and provides military health services. At the end of September, Sierra served more than 1.2 million members.
      September-quarter results were impressive. Sierra reported earnings per share of $0.72, up 85% from a year earlier. Sales rose 18%. Cost controls and solid membership growth fueled the gains. The medical care ratio medical expenses divided by premiums and other fees declined to 75.9%, ranking near the best in the industry. A healthy local economy continues to fuel enrollment growth. Total membership rose 2.5% versus a year earlier, keyed by a 7.8% increase in HMO enrollment.
      For 2003, management expects earnings per share to surge 91% to $2.65. For 2004, Sierra expects per share profits of $3.00 to $3.10, excluding potential dilution from the company's senior convertible debt. If the stock price remains above $21.95 per share for a specified period, the debt could be converted to common stock, adding about 6.3 million shares and trimming 2004 per share profits by roughly $0.45 to $0.50. The company has 30.9 million diluted shares outstanding, so conversion would increase the share count by about 20%.
      Shares of Sierra sold off after the Department of Defense did not renew its contract for TRICARE, the health-insurance program for military retirees and dependents. At the end of September, Sierra had 704,300 people enrolled in the program, or 57% of total membership. Yet less than 10% of Sierra's profits come from TRICARE. Still, losing the contract could reduce annual earnings per share by $0.20 to $0.30, the full impact of which would not hit until 2005. Sierra filed a protest over the contract award, though no decision is expected for several months.

Anxiety regarding the TRICARE contract, potential share dilution from the convertible debt, and the planned sale of the workers compensation division has weighed on the shares. But, Sierra's core managed-care business remains strong, and the company could use share repurchases to at least partially offset dilution. Recently, Sierra authorized the repurchase of up to 3 million shares of common stock. Sierra's Overall Quadrix® is a solid 93.
Considering Sierra's earnings momentum and favorable industry outlook, the stock appears unduly cheap at nine times the current year profit estimate. In contrast, the company's two major peers Health Net and Humana trade at forward P/E ratios above 12. Sierra's five-year average P/E ratio based on trailing earnings is 12. An annual report for Sierra Health Services is available at 2724 North Tenaya Way, Las Vegas, NV 89128; (702) 242-7000."

Louis Navellier's BLUE CHIP GROWTH LETTER
7811 Montrose Road, Potomac, MD 20854.
Monthly, 1 year, $299.

       Louis Navellier: "My Top 5 list continues to perform very well. Year-to-date, the Top 5 is up over 47%. As always, I must encourage you to be invested in more stocks than just the Top 5. The broader your portfolio, the less volatility you'll experience. My Top 5 stocks this month are:
       Amazon.com (Nasdaq AMZN) has given us a 48% profit. The company has consistently beaten its earnings expectations. It's always nice to see a company beat its earnings expectations, but it's especially impressive to see a company top forecasts quarter after quarter. Analysts now forecast earnings of 86 cents a share for next year. I currently rate Amazon a Buy whenever it's below $68.
       eBay (Nasdaq EBAY) is very close to making an all-time high. In Mid-October, eBay reported earnings of 18 cents a share, in line with analysts' forecasts. The company guided slightly lower for next year, but given how fast eBay is growing, I'm not concerned. I'm keeping the Buy Below price at $60.
       Imperial Oil (ASE IMO), my one new buy for the month, in the Conservative Group. The company pays a generous dividend of 22 cents a share (Canadian). Imperial Oil has paid a dividend every year for over a century. Buy below $44.
       Paccar (Nasdaq PCAR) returns to the Top 5 list for the third straight month. We currently have a small profit in Paccar, but I expect the stock to respond well to its earnings report. I'm keeping it in the Moderate group this month, and I'm lowering the Buy Below price to $87.
       Yahoo (Nasdaq YHOO) announced third-quarter earnings of 10 cents a share, which beat expectations by one penny. Revenue was up 43%. The company also guided analysts higher for the fourth quarter and for next year. I still have Yahoo rated as an Aggressive stock. I'm raising the Buy Below price to $51.
       Due to the Smith Barney downgrade of eBay, now is a great time to pick up Amazon, eBay and Yahoo. The third and fourth quarters are historically the strongest for Internet-related stocks, so I expect very strong earnings results for all these stocks. Imperial and Paccar should continue to benefit from the cyclical surge in the U.S. and Canadian economies."

PEARSON INVESTMENT LETTER
6431 Rubia Circle, Apollo Beach, FL 33572.
Published for clients of Pearson Capital, Inc. www.pearsoncapitalinc.com.

       Walter Pearson's recommended Growth & Income Stocks for November are Gladstone Capital Corporation (Nasdaq GLAD $20.16) and PrivateBancorp, Inc. (Nasdaq PVTB $40.50).
       Gladstone Capital Corporation is a specialty finance company that typically makes loans to companies that are substantially owned by leveraged buyout or venture capital funds. The Company has a wholly owned subsidiary, Gladstone Advisers Inc., through which it conducts its day-to-day administrative functions and provides managerial assistance to its portfolio companies. Gladstone Capital typically invests in senior, senior subordinated and junior subordinated notes. The Company's loans typically range from $5 million to $15 million, mature in no more than seven years and accrue interest at a fixed or variable rate that exceeds the prime rate. For the nine months ended 6/30/03, investment income rose 65% to $11.2 million. Net increase in assets rose 74% to $8.4 million. Results reflect increased interest earned and lower professional fees paid.
       PrivateBancorp, Inc. is a bank holding company with two bank subsidiaries, The PrivateBank and Trust Company and The PrivateBank PVTB focuses on the personal financial services needs of their clients, as well as the banking needs of their clients' various business and investment interests. The Company has four operating segments: The PrivateBank (Chicago), the PrivateBank (St. Louis), Wealth Management and the Holding Company. The Company's investment portfolios are included in the results of The PrivateBank (Chicago) and The PrivateBank (St. Louis). For the 6 months ended 6/30/03, total interest income rose 21% to $41M. Net interest income after LLP rose 47% to $23.9M. Net income rose 73% to $8.2M. Net interest income reflects higher securities income and a decrease in deposit costs."

DOW THEORY FORECASTS
7412 Calumet Ave., Hammond, IN 46324.
1 year, 52 issues, $259.

       Richard Moroney: "With corporate profits showing impressive growth and the market averages reaching new highs, finding an excuse to buy a stock is not difficult. Judging from the low quality of the stocks that have led since March, investors are rationalizing all manner of purchases. Shares of companies with the weakest track records and worst profitability have rallied the most, and stock price momentum is again reason enough for many investors to buy.
       While we have little doubt the rush into richly valued, low-quality stocks will end badly, that is not reason enough to avoid stocks altogether. The outlook for corporate profits in 2004 is solid, and many quality stocks are trading at reasonable valuations. Subscribers should take advantage of the relative underperformance of quality issues, which we expect will lead the next leg of the bull market.
In the following paragraphs, we review four quality issues with strong finances, attractive market positions, healthy sales and earnings momentum, and bright year-ahead growth prospects. While not in the bargain basement, all four seem reasonably valued relative to historical norms and expected growth rates.
       Biomet (Nasdaq BMET $36) enjoys strong positions in several attractive markets. With an aging population should come growing demand for the company's hip, knee, and shoulder replacements. The shares have rallied to a five-year high, spurred in part by strong August-quarter earnings. Per-share profits rose 20% on 17% sales growth, or 12% using constant currency. Sales of reconstructive devices jumped 15% excluding currency translation. Even with the recent rally, Biomet is modestly valued relative to its peers. Based on expected year-ahead earnings, Biomet's price/earnings ratio is 27, compared to 32 for Stryker and 34 for Zimmer Holdings (NYSE ZMH $65). A small discount seems justified given Biomet's slower projected near-term sales growth. But the company should deliver 12% to 15% revenue growth through fiscal 2005. If Biomet can maintain its earnings momentum and show that the fiscal 2004 estimate is too conservative, the price/earnings ratio should climb. Assuming the forward P/E can move to 32 near the midpoint of its five year range the stock could trade above $42 over the next 12 months. Biomet is a Focus List buy.
       Citigroup (NYSE C $48). The company should deliver strong earnings growth because of its capital-markets exposure, improving asset quality, and robust operating leverage. In addition, Citigroup is positioned to benefit from a global economic recovery. The company notched impressive September-quarter results. Revenue jumped 10%, fueled by gains in retail banking and life insurance. Per-share earnings from continuing operations were $0.90, up 25%. Six of the company's nine businesses, accounting for roughly 80% of consolidated earnings, posted double-digit profit growth. Citigroup has been one of the best-performing large banks in 2003, gaining 37%. The shares still offer plenty of upside potential given their reasonable valuation and earnings prospects. Wall Street expects December-quarter earnings per share to nearly double to $0.89. Full-year profit estimates should come in around $3.41, implying 30% growth. For 2004, profit estimates range from $3.67 to $4.00. Citigroup trades at 14 times the consensus estimate for 2004, in line with its peers despite top-notch growth prospects. Citigroup is a Focus List Buy and Long-Term Buy.
       Michaels Stores (NYSE MIK $48) a top pick for 12-month gains. The company, the largest retailer of arts, crafts, and framing supplies for hobbyists, enjoys substantial buying power and distribution advantages over its competition. Easy prior-year sales comparisons should allow Michaels to deliver strong same-store sales growth in coming quarters. Earnings and cash flow should benefit from cost cuts and improved inventory control. For fiscal 2004 ending February, the consensus estimate for per-share earnings is $2.44, up from $2.09 in 2003. For fiscal 2005, Wall Street expects earnings to climb 16% to $2.83. The stock trades at 20 times current-year earnings estimates. Using fiscal 2005 estimates, the P/E falls to 17, a slight discount to the three-year average. While Michaels is somewhat expensive for its industry, the price seems justified given the company's operating momentum. Michaels Stores remains a Focus List Buy.
       PepsiCo (NYSE PEP $48), the No. 2 U.S. soft drink maker, is a high-quality company with strong operating momentum. Favorable trends in key markets, particularly snack foods, set the stage for growth. International expansion and a growing noncarbonated product line should support growth as well. Looking ahead, PepsiCo plans to increase it emphasis on healthier foods. A strong balance sheet should support the company's growth initiatives and share repurchases. PepsiCo scores an impressive 89 for Quadrix® Financial Strength. Consensus estimates project December-quarter earnings per share of $0.57, implying 14% growth. For 2003, per-share earnings should climb 13% to $2.21. For next year, per-share earnings estimates range from $2.40 to $2.48, with an average of $2.45. At 19 times that estimate, PepsiCo is reasonably valued given its strong franchises in snack foods and beverages. Based on trailing earnings, the five-year average P/E is 27. PepsiCo is a Focus List Buy and a Long-Term Buy."

       Konrad Kuhn: "Universal Express (OTC BB: USXP $0.08) has evolved into a conglomerate of supportive companies center on its private postal network WorldPost Network. Its principal businesses include Universal Express Logistics, Inc., which includes WorldPost Intl. Courier Service, Virtual Bellhop® and Luggage Express, and Universal Express Capital Corp. (which includes the Universal Cash Express division). USXP's private postal and business service centers form a highly fragmented cottage industry and they believe that since this industry generates over $8 bil. in sales and presently consists of more than 20,000 independent operators, there is a significant market opportunity for the development of an association, with the goal of unifying and organizing independent and franchised postal stores nationwide. USXP has enlisted more than 9,000 private postal centers in a network called WorldPost and produces growing revenue streams for both its members and USXP.
       Universal Express Logistics, Inc. joins the company's visionary Luggage Express service offered through the WorldPost Network and its Internet-based Virtual Bellhop® luggage pickup and delivery service, which free travelers from the stress of dealing with their luggage as they travel worldwide. USXP charges an average of $70 per piece to deliver dropped-off luggage to a traveler's final destination. With over 1.5 bil. suitcases presently being checked by domestic passengers, USXP's companies offer significant benefits to the airlines. And, when you consider that by '05 domestic airline luggage is expected to exceed 3 bil. pieces annually, USXP's revenue potential is huge as acceptance of luggage transportation services reaches critical mass with further branding and advertising.
       Recently Luggage Express formed a strategic alliance with Samsonite to be featured in the 190 Samsonite Company Stores, and also announced a strategic alliance with the Society for Accessible Travel and Hospitality (SATH) to provide luggage delivery services for disabled and mature travelers.
       Last month, a government policy report prepared by USXP, the "White Paper," was presented by Pres. Altomare on Capital Hill. He met with members of the House and Senate and Congressional Staff, Dept. of Commerce, and Transportation Security Administration staff to discuss measures contained in his White Paper, "more security, less hassle for American travelers: a private sector solution for the airline industry." The plan saves taxpayers $550 mil. to $1.4 bil. yearly in luggage screening costs; airlines will save between $1.6 bil. and $4 bil. in labor costs; airlines will generate about $16 bil. in additional revenue and, with the creation of a new $22 bil. industry segment, parcel carriers will enhance revenues, create 250,000 jobs, and establish a hassle-free, safer way for Americans to travel, while wasting less time going through American airports. The economic costs associated to saving an hour of time per traveler per trip exceeds $52 bil. annually. USXP has done extensive research and is in discussions with Homeland Security and Congressional sources, as well as airline and air transport industry representatives, about the possibilities of changing the way Americans view luggage in the paradigm of travel. According to the Wall Street Journal, USXP was the number one luggage service in America as per their test. USXP is on the cutting edge of the transportation world.
       USXP's Universal Express Capital Corp. is a full-service, asset-based transportation and leasing service that provides capital acquisition funding for the business sector. The company projects minimum and annual lease originations of $24 mil. USXP recently entered into a management contract with Go Commercial Leasing Corp., which has a well-established customer base in the commercial transportation industry.
       USXP's Platinum Card is its answer for millions of people who regularly send money overseas to their families. The USXP pre-paid, FDIX insured ATM card provides an instant, secure method of money transfer across international borders. The USXP Platinum Card also targets the 30% of the U.S. population with no checking accounts or credit, and with over 9,000 retail locations, a distribution plan that is creatively affordable and potentially quite profitable, especially since the credit card division is booking up to 10,000 cards monthly.
       WorldPost, an international courier service, is an alliance of independently owned and operated express carrier services operating at 268 cities in 120 countries. This network currently delivers over 650,000 packages per month and is part of the world's largest independently owned courier network. It is the fifth largest express courier network in the world behind the integrated United States express carriers such as FedEx, UPS and DHL. According to industry estimates, private postal stores alone ship $600 mil. annually in international packages and without WorldPost are totally dependent upon their supplier's shipping. Now WorldPost network members can offer an in-house solution for international deliveries at a higher profit margin for themselves and increased value of international delivery service to their customers rather than the more expensive traditional carriers.
       Revenues for FY'03 leaped 465% to $2.4 mil., with a loss per share of (.02) vs. a loss of (.02) for the prior year. Of the 459,938,059 shares outstanding approx. 6.6% are held by insiders. The dramatic improvement in the financial condition of this developing 14-yr. Old conglomerate tells only part of the story. It doesn't show that at the onset, astute and enthusiastic Pres. Richard Altomare took a delisted, bankrupt company ($48 mil. in debt) and had a vision to build a private postal system and all the necessary components without any initial IPO or even one market maker. Today, USXP is relatively debt free, has over 40 market makers (strong liquidity), over 20,000 shareholders, and the financial support necessary to acquire transportation and logistical companies more developed than this young company. In fact, USXP announced that it signed a contract to purchase North American Airlines, a charter airline operating a fleet of 757 and 767 airplanes based at JFK Airport in NYC. Once the process of due diligence is complete, this acquisition will add over $160 mil. in revenue. Since we recommended the stock in July at .03, it has broken out of its long-term downtrend (AB (Fig. 1) vaulting on increasing volume through its 1st area of overhead resistance, hitting .13 for a 300%+ gain before pulling back on top of support in the .07 area. The stock remains in a solid uptrend undergoing "corrections through time" in a well-established uptrend channel (Fig. 2). Once the stock chews up resistance at the .16 level we can expect a run to the .27 area and from there we could see an explosive upsurge to .65 and better.
       We have received an overwhelming number of phone calls in regards to the terrible injustice of naked shorting that has destroyed many companies and also cost USXP's stock to drop from $2.00 to .02,wiping out many shareholders. Naked shorting is a serious problem in our country and has a tremendous negative impact upon small companies, the backbone of this nation, which is responsible for most job creation while some, like USXP, are held hostage to "economic terrorism," states Pres. Altomare, who describes the electronic churning downward of shares of developing OTCBB companies by broker dealers and market makers who never intend to or fail to cover short sales. As an advocate of shareholders' value and rights, Pres. Altomare is leading the charge through the halls of Congress, suggesting positive solutions to the naked short selling issue.
       Don't listen to the slanderous paid chat room attacks against Pres. Altomare's character or integrity, which is nothing but gossip and hearsay by the shorts trying to scare and create fear for less sophisticated investors to sell their stock to them at a cheaper price so they can profit. Remember, Mr. Altomare's legal team has put an individual in prison and received a $500 mil.+ judgment (non-appealable, and believed substantially collectable, creating some additional possibilities for future opportunities) against this person and his firms and partners, who headed up a consortium of individuals that were professional naked shorters. Now that Pres. Altomare has become the poster child for naked shorting, he is not well liked by these financial terrorists. As Edmund Burke once said, "Evil triumphs when good and decent people do nothing." Sometimes when you go to the racetrack you bet on the jockey instead of the horse. With USXP's strong business model that won't die and is able to survive and fight against these sleazy individuals, the turnaround of awareness of the naked shorting problem has begunI'll bet on the jockey!
       During the past three years, so many stocks have plunged from $25, $50 and even well over $100, as they fell down to pennies. This is why I feel so strongly about USXP, which is currently trading at pennies and is poised for a dramatic fundamental breakout that could see a doubling, tripling, or quadrupling of the company in the very near future. What a success story! We will inform you of these exciting events as they happen. USXP's stock, selling at .08 with an astute management team led by Pres. Altomare (with an extensive background in investment banking) is just the tip of the iceberg, which could have enormous upside potential of becoming a $30 - $40 stock. A challenging global economy has grown over the past decade. Internet, catalog, and related sales continue to mandate an inexpensive and responsive final mile Domestic International delivery network. That innovative and outsourced final mile network continues to be addressed by USXP. Buy aggressively."

THE WALL STREET DIGEST
8830 S. Tamiami Trail, Suite #110, Sarasota, FL 34238.
Monthly, 1 year, $150.

       Donald Rowe: "The Wall Street Pros and the Smart Money are convinced that the Great Bull Market of 2003 2009 is underway! Keep in mind: Over the past fifty years, 97 percent of the stock market's annual gain has occurred between November 1st and April 30th. Using our three-point investment strategy, you should be fully invested in our recommended stocks and mutual funds right now.
       The next six months should be the best six months investors have seen in a long time. Don't miss it! Enjoy it!
       If you choose to own equities instead of index mutual funds, your best strategy is to purchase the nine following recommended stocks.
       Cray, Inc. (CRAY), Cypress Semiconductor Corp. (CY), EGL, Inc. (EGL), Graphtech International, Ltd. (GTI), Harris Interactive, Inc. (HPOL), SupportSoft, Inc. (SPRT), Ultralife Batteries, Inc. (ULBI), Wireless Facilities, Inc. L.C. (WFII), and W.R. Berkley Corp. (BER).
       Ultralife Batteries, Inc. (Nasdaq ULB www.ulbi.com), one of the nine recommended stocks. Ultralife Batteries, Inc. is leading developer, manufacturer, and marketer of a wide range of standard and customized lithium primary, lithium-ion, and polymer rechargeable batteries.
       The company's primary (disposable) lithium batteries are used in a wide variety of consumer, industrial, and military products. Its advanced polymer and lithium-ion rechargeable batteries are used for wireless communications, computing devices, aerospace applications and many other portable electronic products.
       Ultralife's leading technology, process-engineering capabilities, manufacturing infrastructure and management strengths allow the company to provide a unique breadth of solutions in battery design, manufacturing, marketing, and delivery.
The company maintains its primary manufacturing and R&D facilities in New York, and also maintains a production and R&D center near Oxford, England. Both facilities are ISO-9001 certified. Ultralife also has a supply relationship with Ultralife Taiwan, Inc. for lithium-ion and polymer rechargeable cells.
       Ultralife Batteries' OEM (original equipment manufacturer) and retail customers include leading companies, such as Energizer, Radio Shack, Sears, Kidde Safety, Philips Medical Systems, and the defense departments of the United States, the United Kingdom and Germany.
       Over the past three quarters, Ultralife Batteries has realized earnings growth of 194%, 109% and 57% on sales increases of 134%, 74% and 17% respectively. The company is expecting earnings of $0.60 per share this year, a 207% increase from last year, while the industry is expecting an increase of 8%. Long-term earnings growth is expected to average 30% annually."

THE BLUE CHIP INVESTOR
575 Anton Blvd., Suite 570, Costa Mesa, CA 92626.
Monthly, 1 year, $249.

Peter Hughes: "Pfizer (PFE $32) is one of the world's largest ethical-drug companies. Although best known for Viagra, the company has eight other drugs with sales of over $1B per year. Lipitor, an anti-cholesterol agent, is the top-selling pharmaceutical in the world. The company invests 16% of its annual revenues (over $5B) in research and development and has been rewarded with consistently stellar growth. Pfizer's EPS has grown tenfold since 1986. Furthermore, the company is in the process of rolling out six new drugs. Pfizer also has remarkable financial characteristics. Its net margin is 28% and its return-on-equity is 47%. The company is willing to spend heavily on share repurchases, having bought back approximately 90M shares in 2002 alone.
The pharmaceutical industry has very high barriers to entry and is dominated by a few large companies. Because of its tremendous capital resources as well as its R&D, Pfizer will remain one of those companies. In 1999, Pfizer's P/E was over 50; the stock has since declined and remains 37% below the all-time high it achieved four years ago. The P/E is currently below 20. Also, Pfizer has upped the annual estimated cost savings from its acquisition of Pharmacia from $2.5B to $4.0B. Buy below $31."

GROWTH STOCK OUTLOOK
P.O. Box 15381, Chevy Chase, MD 20825.
1 year, 24 issues, $235.

       Charles Allmon: "Clorox (NYSE CLX $46.43) built a huge consumer products company from the humble beginning of a single produce chlorine bleach, better known as "Clorox." Today Clorox is found in over 120 countries. Not only is Clorox one of the most recognized brand names, the company also markets a string of other brands. Among them are Glad (plastic bags), Press 'n Seal, Tilex, S.O.S., Oxi Magic, Fresh Step, Scoop Away, Pine-Sol, Liquid-Plumr, Ranch (dressing), STP Oil Treatment, ArmorAll, Chux, Kingsford (briquets), Combat, ReadyMop, Brita, Teflon, and Formula 409.
       When Gerald E. Johnston, president and CEO, reported on the fine year in 2003, he had this to say: "2003 was another good year for The Clorox Company. We accomplished much of what we set out to do in fiscal 2003, and the impact of these efforts is evident throughout our results. We grew sales and profit margins, we invested in brand building and innovation, we improved asset and working capital management, and we delivered strong earnings growth.
       "As we did the previous year, we set a few key priorities in 2003 to keep the organization focused: drive growth, cut costs everywhere, get more customer focused and out-execute the competition."
       "On the top line, overall company volume increased 2 percent and sales rose 3 percent to $4.1 billion. Excluding divestitures, total company sales increased 5 percent. And in North America, which represents more than 85 percent of the company's business, sales grew 6 percent, excluding divestitures. On the bottom line, net earnings grew 86 cents, or 63 percent, to $2.23 per diluted share, benefiting from sales growth, cost savings and share repurchases in the current year in comparison to the prior year, which included several impairment and other charges."
       "On the balance sheet, building on 10 consecutive quarters of year-over-year improvements, working capital averaged less than 9 percent of the net sales (-1.6 percent), about 2 percentage points better than the prior year. These `best-in-class' working capital results helped generate very strong cash from operations at $803 million. Many consider return on invested capital (ROIC) to be a key driver of shareholder value."
       "We achieved each of our 2003 financial targets. Our results also were near the top of our peer group on several measures. At 20.6 percent of net sales, Clorox operating margin is top tier. At 19.4 percent, operating cash flow as a percent of net sales is also top tier. Our working capital performance ranks Clorox among the top three companies in our peer group. With our 23 percent dividend increase effective July 31, 2003, our dividend yield will be among the best. And Clorox ROIC is also top tier."
       "I've been talking a lot lately to the Clorox organization about the importance of delivering consistent results year in and year out it's one of my top priorities. In fiscal 2004, we'll continue to drive toward that goal by maintaining our focus on essentially the same key priorities we had in fiscal 2003.
       "First, we'll step up our efforts to drive growth through innovation and investment in brand building, while we also pursue some longer-term growth opportunities. With a strong lineup of new products, including Glad® Press 'n Seal wrap among the record level of first-quarter product introductions, we expect good top-line growth for fiscal 2004. Ultimately, it's about our leading brands leveraging their `right to win' in each of our categories. Second, we'll fund growth initiatives through our priority to cut costs everywhere, which has clearly delivered for us and will continue to do so with initiatives already in the pipeline. In 2004 and going forward, we'll emphasize improving the productivity of our spending to optimize growth and margins. Third, while we are already a preferred partner with many of our retail customers, we'll accelerate our efforts to get more customer focused."
       "Our final company priority is to out-execute the competition. As more systems come online this year, Project Delta, our process and systems initiative, will be a big enabler for Clorox."
On 6-30-03 total assets were $3,652,000,000, current assets $951,000,000, current liabilities $1,451,000,000, cash and short-term investments $172,000,000, long-term debt $495,000,000, deferred income taxes $115,000,000, shares outstanding 213,677,000, shareholder equity $1,215,000,000 ($5.69 per share), return on shareholder equity 40.6%, positive cash flow. [Company address: 1221 Broadway, Oakland, CA 94612. (510) 271-7000.]"
       Allmon's Comment: "In recent weeks, Clorox announced that new tax audits were in the works for prior years. We'll know in due course of any irregularities that could affect Clorox, perhaps impairing reported profit reports of 2002 and earlier years. Sometimes too-confident insiders overreach in their endeavor to push aggressive accounting. This is a fact of life that every CEO must live with as he or she tries to keep staff inspired without killing the entrepreneurial spirit of any company. Of course, the buck stops at the CEO, who can be unfairly tarnished by the actions of staff members.
       In 2004 (June), revenues of Clorox could approach or exceed $4.3 billion, throwing off earnings in the $2.40 - $2.65 range. Consumer products offered by Clorox could grow for years. Of course, the ubiquitous "Clorox" bleach heads the list of well-recognized products.
Let's not ignore the Clorox balance sheet, where current liabilities exceed current assets by 50%. Not exactly what you write home about. Long-term debt was sharply reduced in fiscal 2003. Shareholder equity also declined modestly at the same time. Let's also not ignore the fat 41% return on shareholder equity, which is one of the highest among major U.S. corporations.
       When the bear market resumes in 2004, or even 2005, do keep an eye open for a major buying opportunity. Clorox, in years past, made a bundle of money for my clients, but we must buy when the price is right. Buy Clorox in a dead market, not in a bubble environment. Clorox probably will be around longer than anyone reading this report."

John Dessauer's INVESTOR'S WORLD
7811 Montrose Rd., Potomac, MD 20854.
Monthly, 1 year, $249.

John Dessauer: "I am raising my 12-month target for AT&T (NYSE T $22.09) to $30. AT&T has raised the dividend to $0.2375 per share per quarter ($0.95 a year). This lifts the dividend yield to 4.3%. AT&T is still generating huge amounts of cash for debt reduction. As of June 30, AT&T had $5.3 billion in cash. From a peak debt load of $65 billion, AT&T expects to have less than $10 billion in debt by the end of 2003.
There are too many (13) wirelines and wireless telecommunications companies competing in the U.S. Some will not survive. Others will be gobbled up by stronger competitors. AT&T is strong and getting stronger. High cash flows, declining debt and a relatively cheap stock make AT&T a regular target of takeover rumors. As consolidation develops, a takeover can go either way. AT&T may be a buyer. AT&T has 50% more revenues than MCI. Furthermore AT&T is still cutting costs. Clearly, AT&T is a survivor in a very rough business."

THE MAJOR TRENDS
250 West Coventry Court, Suite 109, Milwaukee, WI 53217.
Client letter of Sadoff Investment Management LLC.

       Ronald Sadoff: "The newspaper publishers have the characteristics we like:
       1. Their share prices have clearly broken out from a decade of underperformance to be followed by a long period of out performance. They have already successfully made the pivot.
       2. The share prices based upon pure economics are fundamentally undervalued with the added sweetener that most newspaper publishers operate somewhat as a monopoly within their geographic area.
       3. The profits and revenues are improving nicely from very depressed levels.
       4. Most of the companies (significantly owned by management) are repurchasing their own shares with excess cash flow.
       Accordingly, we have been buying the newspaper publishers over the last several years.
As the economy strengthens, advertising revenues will increase. So, too, will the very lucrative classified ad business particularly the help wanted columns. Meanwhile, the companies have done a great job of cutting costs.
       We particularly like Gannett (GCI), which owns 400 newspapers and its successful national paper, USA Today. Also, the New York Times (NYT) and Washington Post (WPO) are very popular brand names. We also like Knight Ridder (KRI) (with 31 large city newspapers) and Lee Enterprises (LEE) (with 44 daily and 175 weekly and specialty papers)."

       Katie Winchell: "The last few years may have been lackluster for many publicly traded companies influenced by the U.S. economy, but Zenon Environmental, Inc. (OTC:ZNEVF; Toronto: ZEN.TO) is thriving. On the heels of a record 2002, the Ontario-based manufacturer of water and wastewater treatment membranes is boasting its best second-quarter results ever and is positioned for even stronger growth.
       The main reason? "Zenon offers world-leading technology in a market with tremendous growth potential," said Rafael Simon, chief operating officer at Zenon. "If you ask industry engineers what the dominant water and wastewater treatment technology will be in the next decade, they will say membranes."
       Most water and wastewater treatment plants use a multi-stage process for filtration and disinfection that involves screens, clarifiers, and filters and UV or ozone exposure.
       In contrast, membrane technology is a one-step process in which a physical barrier - the membrane - obstructs contaminants such as bacteria and heavy metals, but allows water molecules to pass through. It's a simple and durable solution that outperforms other treatment technologies.
       Until recently, the only drawback to membrane technology was its high price. But after years of investment in research and development, Zenon has succeeded in bringing manufacturing costs down dramatically. "We've done a lot of work to be positioned for growth as the technological market leader, and we're hitting records in growth of revenue and profitability," said Simon. "It's happening now."
       The company's proprietary polymeric membrane, branded as ZeeWeed, is competitively priced and superior in function to multi-stage water and wastewater treatment options, says the company. ZeeWeed is sold on its own or as part of a sophisticated water and wastewater treat-ment system.
       ZeeWeed is winning recognition within the water industry; Zenon won the esteemed 2003 Stockholm Industry Water Award for the design of ZeeWeed. According to Stockholm Water Front Magazine, ZeeWeed is "an energy efficient, innovative, compact and forward-looking membrane concept. The unique membrane successfully removes pathogenic micro-organisms which are not eliminated by conventional water treatment methods and is therefore regarded as a valuable contribution towards safeguarding potable water supplies. The ZeeWeed membrane technology, which resembles a bundle of seaweed sweeping in the treatment tank, can be efficiently used in industrial as well as municipal plants and leads to significantly higher treated water quality than traditional methods."
       Additional awards given to Zenon in 2002 include Technology of the Year, presented by Frost & Sullivan; the Product Achievement Award from the Filtration + Separation Magazine Industry Awards; and Canada's Top Exporter Award from the Department of Foreign Affairs and International Trade.
       Around the globe, customers are adopting ZeeWeed, thereby ensuring Zenon will continue to hold its place as the world leader in the membrane market, say Zenon representatives. In 2002, the company secured its largest municipal contract wins ever. Projects in Singapore, Hungary, Michigan and British Columbia each are valued between $8 and $20 million. In 2003, as demand for clean water inevitably continues to outstrip the availability of safe groundwater supplies, similar orders from Georgia, Mississippi, California, China and Europe will soon result in safe drinking water and reusable wastewater for non-potable purposes.
       This global distribution of customers is not incidental. Zenon has been steadily building its international presence. The company has one membrane manufacturing plant in Canada and another in Hungary. Additional sales and engineering offices are located in Canada, the U.S., Europe, South America, Asia and the Middle East.
       The United States accounts for just over half of Zenon's sales, Canada and Europe each represent one-fifth of sales, and the remaining sales locations are scattered across Asia, Latin America and the Middle East. Asia in particular is targeted for future market expansion. Zenon has cultivated a global network of over 100 sales representatives and licensees to help secure contracts in international markets.
       Municipalities make up 60 percent of Zenon's customer base and generate the largest orders; the Singapore plant alone will produce a flow rate of 72 million gallons of treated wastewater per day. The remaining 40 percent of Zenon's customers are in industrial markets and require pure water for power generation, automotive and chemical processes, and other uses.
       Zenon's diversified markets have played a strong role in the company's robust growth.
       The 2002 fiscal year showed record revenues, income, bookings and backlogs. Revenues were $145.9 million, up 17 percent from FY 2001. Operating income reached $8.5 million, compared to $6.9 million for the previous year. Net income hit $6.4 million, or $0.24 per share, in contrast to FY 2001's $4.6 million and $0.19 per share. New project orders reached $201 million, while FY 2001 new orders totaled $176 million. The backlog - work that is contracted but not yet completed - of $164 million exceeded FY 2001's backlog of $122 million by 34 percent.
       Six-month results for FY 2003 continued to display record growth in comparison to the same period in FY 2002. Revenues reached $77.6 million, compared to $57 million. Operating income was $5.3 million, net earnings were $4.1 million, and net earnings per share hit $0.15.
       Second quarter 2003 results were also impressive, with record highlights including revenues of $41.5 million (a 53 percent jump over second quarter 2002) and earnings of $2.2 million (302 percent growth year-over-year).
       "We have had a very active quarter, as can be seen by our strong results," said Andrew Benedek, chairman and chief executive officer of Zenon. "We increased our backlog and booked over $80 million in new orders, both of which represent record numbers for our company."
       Zenon's sound financial management is evident in other measurements as well. For the 2002 fiscal year, selling, general and administrative expenses as a proportion of revenue hit a record low of 23 percent. The company also reported almost no debt, complete asset ownership, and $16 million in cash reserves that same fiscal year.
       "Zenon will continue 'getting it right,'" Benedek said, "and that means making the right decisions to grow to a billion-dollar company in the next eight to ten years."

THE MONEYPAPER
555 Theodore Fremd Ave., Suite B-103, Rye, NY 10580.
Monthly, 1 year, $99.

       Vita Nelson: "We asked the following stockbrokers to give us their single favorite stock for growth over the short or long-term.
       Each month, they have the option of holding the stock or replacing it with a stock they believe will produce better results.
       James Fraser, CFA/Pres., Fraser Management Assoc.: Ultralife (ULBI).
       Peter J. Cirocco, VP of Inv., Paine Webber: Raytheon (RTN).
       Ronnie Grove, 1st VP/Fin'l Cons., Merrill Lynch: General Electric (GE).
       Anne Davidson, Director, Wachovia Securities: Coca Cola (KO).
       Bill De Lizza Sr. VP, Wachovia Securities: Bed, Bath & Beyond (BBBY).
       Steve Sokoloff, VP, Schroder & Co., Granite Const. Co. (GVA)."