Prime Stock Advisory Letter for October 29th, 1998

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Today's Comments:  The overall market finished yesterday essentially unchanged.  There was strength in the Biotech,  Healthcare,  and High Tech indices.  There was a minor upward movement in the financial and retail indices,  but that appeared to be more of a bounce upwards as part of a continuing downward trend more than anything else.  The airline issues were to the upside,  but the weakness in a few key players is causing some concern that they may turn lower in the near future.  There was weakness in the consumer,  Cyclicals, telecommunications,  and commodity based indices.  The overall weakness in the major market indices over the last few days has raised several points of concern.  The S&P 100 'OEX',  the S&P 500 'SPX', and the Dow Jones Industrials Average 'INDU' all generated "Sell Signals" yesterday.  This leads me to believe that the overall market is going to turn lower within the next few days.  For the last week I have been watching all these market experts on CNBC state that the reason the market is moving higher is that magically all these plans have been announced that will fix the world's problems and there is nothing to worry about any more.  Well saying something is going to happen and actually making it happen is two different things.  I for one am a little skeptical about all these government institutions implementing all these massive solutions to these problems without any difficulties being encountered along the way.  I think what the market is experiencing is a dose of reality that the world's problems are not fixed yet.  If I am accurate of my assessment of the situation then the market is headed lower.  The Bottom Line:  The overall market should move lower.
 

Company:  G.P. Strategies           Symbol: 'GPX'      Closing Price: $9.56/share.
YH: $17.69       YL: $9.125          EPS: $0.58       P/E: 16.4        Forecasted EPS: $0.91
Dividend: N/A        Yield:  N/A      Ex Dividend: N/A
Price Target:  $12.00 & then $14.00   Downside Stop:  $8.875
Options Recommendation:  December 10 Calls,  Symbol 'GPXLB' @ $0.81/contract

Company Description: This company provides professional training services to large companies

Recent News:  10/01  GP Strategies sells Five Star unit.
10/01  GTS Duratek buys back 300,000 shares from GP Strategies.
8/26  GP Strategies board authorizes buyback of up to 500,000 shares.

Our Analysis: This company provides professional training services to large companies.  It has sold off its noncore holdings to fund several acquisitions that were paid for in cash without the issuance of an new shares of stocks.  These acquisitions will increase the per share earnings of the company and open up new markets for the firm.  The stock has backed off with the rest of the market.  The company is scheduled to announce its 3rd quarter income today.  As a result of these acquisitions I am expecting these numbers to show substantial earnings growth. 

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