GTK is a world wide supplier of computerized on-linelottery products and services. As of 2/99, the Company has contracts to supply and/or operate lottery systems for 29 U.S. customers and 52 customers outside the U.S. For the 39weeks ended 11/25/00, total revenues fell 7% to $690.6M. Net income fell 73% to $17.3M. Revenues reflect a decrease in the sales of lottery terminals. Earnings also suffered from a $40M special charge and lower gross margins.

April 22, 2001

Although there are very few players that win the lottery, the ones that always win in this game of chance are those companies that supply the machinery to run these highly regulated sweepstakes. In addition, more and more states are now jumping on board the lucrative gravy train of starting and running a state lottery. GTECH has been enjoying this trend by providing the necessary equipment for governments in the U.S. and around the world to set up their own "numbers" games. GTK has been in a steady up trend despite posting earnings on April 6th that showed a decrease in profits of 6 pennies to $0.79 from the same quarter a year ago. That said, analysts believe that GTK will increase their profits for the whole year by 33%. Ever since November, GTK has been moving steadily higher and has been finding excellent support along its 40-DMA, which is now located at $27.56. Three of our favorite technical indicators, the MACD, Money Flow and OBV are all steadily rising and point towards a continuation of the positive momentum. GTK may prove to be an excellent buy if it can establish a new high above $29.95 on Monday with first hour trading volume exceeding 50,000 shares. If GTK gaps up to $32.00 or higher on the open, traders may want to wait for a little pullback to around $29.50 before initiating positions.

Picked on April 22nd @ $29.79
Change since picked +0.00
Stop Loss $26.75

April 26, 2001

GTECH has taken a bit of a break from its foray into new high ground. The stock did manage to make a new high yesterday but subsequently pulled back. Nevertheless, GTK still possesses one of the most impressive charts in the market due, in part, to the excellent profit growth the company has seen from its lottery products. The stock has established some mild support at $30.88, which is just above the 5-DMA of $30.72. Traders may want to add to positions as long as GTK can stay above the 5-DMA. As always, a little patience may be rewarded if one waits for a pullback should GTK gap up two or more points on the open. If support fails we may see a mild round of profit taking down to the next area of support at the 10-DMA just below $30.00. The MACD is still solid but the Money Flow has started to pull back. Bottom line is that the momentum may be slowing. However, this scenario can quickly change and GTK may start to soar again once it trades above $32.00. Momentum traders may want to buy the stock once it crosses $32.00 on midday volume approaching 100,000 shares, otherwise keep an eye on those support levels.

Picked on April 22nd @ $29.79
Change since picked +1.31
Stop Loss $26.75

April 24, 2001

GTECH keeps hitting winning numbers by establishing new highs yesterday and today. Granted, the advance has not been huge but considering the weakness in the overall market so far this week, we are impressed with the stock’s relative strength. GTK is attractive to investors who seek growth at a reasonable price. Analysts expect GTK to grow its earnings by 32% this year, and the stock is trading at a comparatively low P/E of 24.88. Momentum traders may be interested in picking up this stock if it can trade above today's high of $31.50 tomorrow. However, a gap up opening to $33.00 or higher might result in a pullback later that would offer a potentially more favorable purchase price. A bullish trade may be even more enticing if a new high is accompanied by first hour trading volume exceeding 50,000 shares. Speaking of volume, today's volume of 640,000 was more than twice the three-month daily average of 268,000. This is a very good sign that there is increasing interest in GTK among bulls. One caveat: Traders should probably be cautious if GTK starts pulling back because the RSI is now indicating an overbought condition.

Picked on April 22nd @ $29.79
Change since picked +1.31
Stop Loss $26.75