AMSWA - (recommended to subscribers on 12/10/02 at $2.56)

     On Nov. 18th American Software, Inc. reported net income of $2 million or .09 cents per share (including a 2 cent gain from the sale of subsidiary Amquest, Inc.).  Revenues were $14.8 million, down 4% from the prior year Quarter.  Looking at the chart over the last 5 years you can see a potential inverted head and shoulders bottoming pattern.  Even going back to the 1980's you can see the stock bottomed in this general area many times.  Looking closer at the chart you also see that it took time for it to rebound each instance.  Sometimes 1-2 years.  However the gains in the past have been substantial.  Tangible book value is approx. $2.75 per share with cash and investments of $2.80 per share (up over 10% since the end of the last quarter due to an increase in LGTY shares.  AMSWA has a 86% stake in LGTY currently worth $32 million  which is included in the value of AMSWA's investments). 

    Both companies carry no debt.  AMSWA has a total market cap of $57.6 million and trades at 1x sales.

    Looking at the chart you will see the stock traded down to the low $1 range a little over a year ago.  However we don't think it will return to that level because AMSWA has significantly improved it's balance sheet and increased
tangible book value since then.