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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme

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To: Phatt Jake who wrote (8680)	1/21/1999 4:41:00 PM
From: Steven G. Trapp & Company	Read Replies (1) of 8798

HOAK BREEDLOVE WESNESKI & CO. EQUITY RESEARCH David Yuschak, CFA 972-960-4867 January 21, 1999 Trading 800-893-5759 Craftmade International, Inc. (CRFT - $15 13/16) Rating: BUY Target Price: $22 + Seasonally slower period produces better-than-expected results as Craftmade ceiling fans exhibit strong growth. We are raising our fiscal 1999 estimate and initiating a fiscal 2000 estimate. + Syngeries of Craftmade and TSI signficantly broaden company's potential market + Strong cash flows reducing company's debt. + Rasing target price to $22 from $16. Investment Recommendation Craftmade's common stock performed exceptionally well in 1998, up almost 120% as the company's earnings broke out to record levels following several years of modest results. (The stock's performance over those previous years reflects those fundamental results.) We view the stock's performance in 1998 as a breakout year for it as well. As a result, we remain optimistic about the stock's potential over the next 12 months since the company is still early in its strategy to increase its market share in the ceiling fan and outdoor lighting industry. The outlook suggests the company has substantial opportunities yet to be realized from the acquisition of TSI. Cross-selling opportunities should produce solid market share gains in its markets. New product rollouts, through internal development (such as the bathstrip lighting) or through acquisition are also a possibility. Craftmade has capacity in its warehouse to generate sales in excess of $150 million. Based upon our fiscal 2000 forecast for sales of $95 million, CRFT has ample operating leverage ahead of it. We have raised our earnings estimate for June 1999 to $0.93 from $0.88 and are initiating a fiscal 2000 estimate of $1.20. Given this optimistic outlook, we are also raising our target price to $22 from $16. Risk in the stock is in the $12-$13 range. We re-iterate our BUY recommendation. --------------------------------------------------------------------------------

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