Stockprowler.com | 9/17/00

With the backdrop of a great deal of volatility and uncertainty in the market again this past week, Stockprowler believes it has found a pick this week to please just about everyone… a company that is profitable, undervalued, growing rapidly, pays a dividend each year of 5%, NasdaqNM, trading at less than $3, and, incredibly, is a wild card speculation. Don't believe it… read on.

Stockprowler's pick this week is…

Display Technologies, Inc. (NasdaqNM: DTEK)

Corporate Web site: http://www.dteksigns.com/
Shares Outstanding: 8.1 million
Public Float: 3.0 million
Insider Ownership: 63%
Institutional Ownership: (8) 7%
Market Capitalization: $22.3 million
Closing Price Friday: $2.75

Orlando, Florida based Display Technologies, Inc. designs, manufactures, installs and services hi-tech electronic computer driven video displays, message centers, scoreboards, and business identity signs. The Company's direct wholly owned subsidiaries include Ad Art Electronic Sign Corporation, Nevada SEMCO, Inc., Don Bell Industries, Inc., Lockwood Sign Group, Inc., JM Stewart Manufacturing, Inc. and the recently acquired Hamilton Digital Designs, Inc. Display Technologies, Inc. is ranked as one of the 10 largest companies in the highly fragmented electronic signage business sector numbering over 3,500 companies in a $4.6 billion industry nationwide. The rapidly expanding company reported revenues of $66.9 million for the nine months ended 3/31/2000 up 38% over the same period last year. Net income applicable to common rose 4% to $1.9 million.The Company's products include image enhancement displays, electronic products, LED products, Wedge-Based products, incandescent monochrome message centers, and other commercial display products such as backlit cabinet displays, channel letters, pylon identification displays, decorative neon, non-lighted signs and sculptures non-lighted signs and sculptures institutional display products.The commercial display market is served by Ad Art, Don Bell, and Lockwood, while the institutional display market is served primarily by Stewart Corporation and Stewart Industries.

LED products are marketed under the brand names StadiaVision, ArenaVision, and InfoVision and provide a picture that exceeds the quality of conventional outdoor CRT (television) displays. These products are used by a variety of commercial and entertainment enterprises including sports stadiums and arenas, convention centers, airports, shopping malls, casinos and concert venues. Commercial customers can use the video display both as a sign to identify and advertise their own products, and also as a profit center on which they sell advertising time to other commercial entities, essentially as an electronic billboard with changeable messages. The Company's wedge-based products provide a lower-cost alternative to its full color LED products. These products consist of wedge-shaped light bulbs that are inserted into parabolic reflectors similar to those found in an automobile taillight. The clear bulb is then covered with a red, green or blue translucent, plastic lens to produce bright, vivid colors. These assemblies are then arranged into pixels and controlled by Windows based software in the same manner as its LED products. The Company expects that its LED and wedge-based color displays will eventually replace its incandescent monochrome message centers. However, its incandescent message centers continue to be an effective low-cost alternative to its customers who need the flexibility of an electronically changeable message on their signs. A black and white incandescent message center has an initial cost approximately one-third the cost of a similarly sized color wedge-based display.

DTEK's commercial signage subsidiaries compete nationwide with other sign companies through sales and service associates located throughout the United States and an extensive network of subcontractors. This provides the company far-ranging geographic capabilities. DTEK's commercial sign subsidiaries specialize in the high end of the business, primarily designing and manufacturing signage which averages $100,000 for Ad Art and $40,000 for Don Bell. However, some major contracts can cost $1 million or more, such as multiple elaborate electronic message boards for large attractions and video display boards for casinos, sports stadiums and other markets. The acquisition of Ad Art brought to DTEK the state-of-the-art technology in colored lens wedge-based and LED (light emitting diode) color technology.

The Ad Art Electronic Sign subsidiary designs and manufactures high quality electronic message centers and video display boards with sophisticated animation, instant replay and live video capabilities. These systems have the ability to display full colors and project live video images. The systems use light emitting diodes (LED) rather than cathode ray tubes (T.V.), substantially lowering the cost of acquisition and ownership and rated at 50,000 hours of life. The displays can be used for indoor and outdoor applications and are louvered so that they are clear and bright in direct sunlight. Operation of these displays is controlled by super pentium computers. Aesthetically pleasing, durable, and economical, the state-of-the-art electronic video display boards, can be found in many of the world's largest sports stadiums, casinos, airports, theaters, auto malls, churches, shopping centers, convention centers and other businesses, including Hiram Bithorn Stadium in San Juan, Puerto Rico, Atanasio Girardot Stadium in Medellin, Colombia, Chelsea Football Stadium in London, Stanford University in Palo Alto ,California, the University of Houston, the Rio, Circus Circus, Monte Carlo, the Bellagio and Excalibur in Las Vegas and in Times Square, Mexico, the Philippines and many other countries. Ad Art is the recognized leader in the design, manufacture and installation of spectacular signs as typically viewed in Las Vegas, Nevada. Currently the casino gaming market is expanding rapidly in Atlantic City, along the Mississippi and on Native American lands nationally. In addition, Ad art has created displays for market leaders like Disney, Wells Fargo Bank, McDonald's, Federal Express, Blockbuster Video, Pizza Hut, Chief Auto Parts, Office Depot, Texaco, Planet Hollywood.

The Don Bell commercial subsidiary of Display Technologies specializes in the design and manufacture of custom-designed corporate identification systems and electronic message centers for commercial clients. These include shopping malls, speedways, theme parks, vacation destinations and other facilities with a themed image. Don Bell's client list is a virtual "who's who" of the theme park, food service and retailing industries. These include Disney, Walgreens, Hard Rock Cafe, Las Vegas, Daytona and Atlanta Motor Speedways, Sea World, Universal Studios, Public Storage, Hess Oil, Wal-Mart, Denny's and scores of others. Ad Art Electronic Sign and Don Bell account for the bulk of Display Technologies revenue. The bulk rest of the company revenues came from the Lockwood Sign and the J.M. Stewart (non-commercial) divisions which serve the needs of institutional customers such as schools, churches, government, military, and civic organizations nationwide. In addition, the company continues to operate La-Man Corporation, an older division, that although accounts for less than 5% of the company's revenue, is very profitable.

A wild card in the future expansion plans of Display Technologies, Inc. is the company's announcement last year that it had purchased all of the outstanding preferred stock of start-up AmeriVision Outdoor, Inc. and has options to purchase all of its outstanding common stock. The preferred stock is convertible into 80% of the common equity. The electronic billboard Industry is emerging rapidly. The advent of economical high-speed communications equipment, new software programs and advanced LED technology has opened a window of opportunity. AmeriVision was formed to aggressively capitalize on this new advertising medium and seize a controlling market share. AmeriVision is a start-up company with electronic billboards currently in place in California and Las Vegas. It has signed right of first refusal contracts with three large property management companies that control over 200 major shopping malls throughout the United States. It is negotiating with three other property management companies who in turn own an additional 300 major shopping malls. These locations, with very high traffic counts, are ideal for electronic billboards. The shops within the malls and their vendors are a ready-made advertising base. The billboards are primarily LED color displays which are expected to be manufactured by Ad Art and are expected to generate minimum advertising revenues to AmeriVision of $50,000 per month each. The preferred stock investment has been structured in a manner that allows Display Technologies to maintain its passive investment until such time that AmeriVision"s earnings will be accretive to Display Technologies' shareholders. Once AmeriVision's earnings reach that level, Display Technologies intends to exercise its conversion rights and options to make AmeriVision a wholly-owned company subsidiary.

If indeed AmeriVision is able to capture a chunk of the lucrative electronic billboard market at shopping malls across the nation, Stockprowler believes the potential here to be huge. The Standard & Poors Stock Report for DTEK released September 9, 2000 is showing 2 analysts with a buy rating on DTEK with a consensus estimate for 4Q earnings of 17 cents. A recent Zack's Investment Research report on DTEK shows a consensus estimate for the 4th quarter of 12 cents. Zack's is also estimating 36 cents for the current fiscal year (2000) and a whopping 98 cents for FY2001. That's a 172% increase in earnings over the next year! Anyone think that maybe the analyst was given a preview of things to come with the AmeriVision deal? Currently, DTEK is showing a P/E of 9.7, which is ridiculously low when compared to competitors like DAKT (P/E of 21.8) and FSS (P/E of 15.8). But even assuming an unchanging P/E of 9.7 we should have a share price of $9.50 based on next years earning estimate of 98 cents. Take a more realistic P/E of 20 and you get a share price of $19.50. Looks to us like DTEK is way undervalued and an interesting speculation to say the least. DTEK closed up 1/8 Friday at 2 3/4 on nearly 3 times average volume. It is being reported that 4Q earnings will be released by the company this week.

Good trading… Stockprowler