Dow Jones 8,427.20 +143.50  2:56 pm EST, Sat., Sept 7, 2002  NASDAQ 1,295.30 +44.30  For info, visit access.smallcapnetwork.com .  S & P 500   893.92 +14.77  To be removed, please click here .  Russell 2000    391.57 +10.51  VOLUME 02: ISSUE 62 Trading Alert: Decorize Inc (DCZ) Dell Computer's (DELL) Initial Public Offering (IPO) was on June 22, 1988, at $8.50 per share (approximately $0.09/share today, on a split adjusted basis).  Despite the carnage in technology, Dell is still up over 9345% since its IPO and over 1108% from when the company was added to the S & P 500 on September 6, 1996. According to the S & P, Dell was the best performing stock of the S&P 500 for the decade of the 1990s. The reason for Dell's success is due to its unique direct-to-customer business model which has effectively pushed its competitors out of the industry.  If the business model is so successful then why haven't other companies played copy cat?  In the PC industry it is already too late to catch up with Dell.  However, the SmallCap Digest has found a company that has been successfully implementing the direct-to-customer business model in the home furnishings industry. Decorize Inc (DCZ) has been on a tear, growing revenues from $711,202 in the nine months ending in March 31st, 2001 to $9,370,387 in the same period for 2002.  That is an increase of over 1217%, which forced us to check our numbers quite a few times to make sure this wasn't an error.  For fiscal year 2002, Decorize is expected to report revenues of $14 million and next year the company could see $20-$25 million based on conservative estimates.  Despite the strong corporate performance the company's stock has been largely ignored by the institutions.  However, this shouldn't be the case in the very near future.  There are rumors that a few small cap funds are taking a serious look at adding Decorize to their portfolios. We feel that based on Decorize's business model and corporate performance the funds will take positions in the company.  In our past two editions we explained how September is housing cleaning time for many of the funds and subsequently new companies are added to their portfolios. Whether or not they will purchase shares in the company only the fund managers know.  However, in a thinly traded stock such as Decorize, a large purchase by a fund would move the shares up significantly. Our price target for Decorize is $3.25 per share which would represent a gain of over 70% from Friday's closing price of $1.90 per share.  A stop loss should be set between $1.60-$1.75 per share depending on your risk tolerance. Why has this company been so successful?  The biggest reason is its business model which in many ways mimics that of Dell Computer. Decorize makes the home furnishing industry more effective thus eliminating the non-value added costs that have traditionally plagued the industry. The company strips away layers of handling and storage steps to deliver products directly from the Far East to the doors of retailers, at substantial cost savings. Decorize has served more than 2,000 small and large retail accounts, including national brand names Dillard's, Rooms To Go and Sears -- The Great Indoors. The growth in housing has also helped fuel Decorize's growth. Take a look below at a chart of housing starts and permits.  The new numbers of homes being built as well as existing homes all need furniture.  Whether there really is a housing bubble or not the bottom line is that there are more homeowners today than ever.  Will these homeowners purchase furniture for their houses?  Decorize's business model allows them to undercut the competition on price while maintaining the quality and service that customers expect. Thus, if homeowners decrease the amount of money they spend on furniture it would drive more sales to Decorize as the large retailers cut back on the amount of over priced furniture they buy and move towards value. Decorize has so far been ignored but that is about to change.  At Friday's close of $1.90 per share, Decorize is valued at approximately $19.8 million dollars.  That is a little less than what calendar year 2002 sales are going to be.  This is also on the cusp of the company reporting its first quarter of operating profit which is ending September 30, 2002.  Decorize's business model is structured as such that once operating profit is achieved, incremental sales fall to the bottom line. This means if the company will be highly profitable if it can increase sales from the current levels. As with any investment there is always risk.  This newsletter is our opinion only, and not a solicitation to buy this stock.  The track record on our previous alerts can be obtained by clicking here.   D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. 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