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

May 3, 2001

Shares of this lottery systems supplier made a valiant effort to establish a new high during a quick round of lunchtime buying. However, the broad market weakness likely curbed the enthusiasm and GTK finished the day pretty much unchanged. Tomorrow could bring another round of broad market selling depending upon the April unemployment rate due to be released before the market opens. If GTK happens to rally tomorrow, it may be a compelling buy once it crosses its old high of $34.30. Momentum traders could start buying the stock in earnest if a new high is established accompanied by midday volume exceeding 150,000. If GTK gaps up $1.50 or more one may want to wait for a bit of a pullback before going long. If GTK pulls back right from the start of trading, look for a bounce off the $32.50 support as another possible entry point. The longer term picture for GTK is quite bullish. This theory is supported by a solid MACD and On Balance Volume. Our one concern is the RSI, which is indicating an overbought condition that may have to be eased through a short term pullback before GTK can resume its ascent.

Picked on April 22nd @ $29.79
Change since picked +3.97
Stop Loss $32.00

May 1, 2001

GTECH is living up to the "tech" in its name. GTK started the week in splendid fashion by achieving new highs that were characterized by strong buying in the technology sectors. Today's move was particularly impressive because volume was excellent at 600,000 shares, which was more than twice the average daily volume of 287,000 shares. This heightened activity is indicative of strong buying from the momentum crowd. One potential entry point would present itself tomorrow if GTK moves above $34.30 accompanied by midday volume exceeding 150,000 shares. That said, it is important to note that the RSI is indicating an extremely overbought condition. The last time the RSI was at a similar level, the stock traded sideways for a few days and then pulled back. Therefore, we have raised our stop to $32.00. In the meantime, enjoy the ride should GTK continue to make new highs.

Picked on April 22nd @ $29.79
Change since picked +4.00
Stop Loss $32.00

April 29, 2001

Market sentiment has been shifting over the last week, which may explain why we saw solid buying across the board. Over the past couple of months we have seen profit taking at the end of the week from nervous traders. On Friday, however, we saw solid buying into the close, which helped GTK to finish right at its high print for the week. This fact bodes well for GTK's prospects for this coming week because momentum traders, who appear to be coming out of hibernation, will likely notice the excellent relative strength that GTK is exhibiting. These types of traders might be strong buyers of GTK on Monday especially if the stock opens to the upside. However, one should probably be cautious about buying GTK if the stock gaps up more than two points at the open. If GTK gaps up by this amount or more, it will likely pull back in the first hour of trading and offer stock pickers a more advantageous entry price later in the session. The current rally has seen GTK find good support at its 5-DMA, which closed at $30.41 on Friday. If GTK drops below this support on Monday, traders may want to hold off on adding to positions. Two technical indicators, the MACD and OBV, are implying that there are potentially more gains to be had down the road in GTK. We are raising our stop to $31.00 to lock in gains should GTK reverse course.

Picked on April 20th @ $29.79
Change since picked +2.45
Stop Loss $31.00