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These companies are buying back their shares. Should you join them?

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Products from Digital Ally, Inc. ( Nasdaq:DGLY) could revolutionize the systems that help protect law enforcement officers and the citizens they protect and serve.

The stock market ended mixed on the week, but held up very well, especially until the last 5-10 minutes when we had a sharp, quick sell-off into the end-of-month close.

When it comes to making a living in the stock market I have had no problem doing that for the past thriteen years. But all of a sudden this year, this trendless market has made it near impossible to make a lot of money. There are a few mutual funds that are up for the year but the majority of the greatest funds and greatest traders are finding it very difficult to make money in a market that simply does not go anywhere.Now, while we have had some big winners like PDO, XCO, and DGLY, we have also had some disappointments like BRKR BKE and AEHR. If this would have been a start of a bull market, like 2003 was, after the 2000-2002 downtrend, I am sure they would have all worked but for right now things still rarely work. But it is obviously clear to me that this market is not moving up or down and that it is just going nowhere. Why then, in God’s name, why would you be wanting to be going long or short stocks. It is clear from where I sit[More...]

Well I am about as upset as the next guy about this rally turning into what it has now turned into–a reversal of a breakout to a breakdown. After speaking with a great trader tonight, who also has a stellar long-term record, I am now comfortable with the [More...]

Source Capital Group, Inc.

May 13, 2008

DIGITAL ALLY, Inc. (NASDAQ:DGLY- $9.50)

INITIATE COVERAGE - BUY RECOMMENDATION

12-Month Price Target = $18.00

For Research Disclosures . See Page 10

DIGITAL ALLY REPORTS OUTSTANDING QUARTER

Digital Ally, Inc. (.Digital Ally. or the .Company.) recently

reported operating results for its first quarter of FY08 ending March

31. Revenue was up 150% from the same quarter of the prior year

and reflected a 22% sequential increase for Q407. With improving

supply chain performance, gross margins increased to 61.9% in

Q108 from 60.3% in Q107 and 57.8% in Q407. The result was

diluted EPS of $0.10 for the quarter vs. $0.01 for Q107. In its press

release announcing the quarter results the Company guided toward

revenue of $40 million for FY08, more than double its FY07 results.

NEW PRODUCT . EXPANDED MARKET

Digital Ally entered the law enforcement market in 2006 with the introduction of its DVM-500 In-Car Digital

Rearview Mirror System. On May 1, 2008 the Company introduced the DVM-250 Pro, a lower priced event

recorder aimed at the broader transportation market. Event recorders automatically record and store video and

audio from outside and inside of vehicles and are used by taxicabs, limousines, school buses, transit buses, delivery

vehicles, utility company vehicles and even personal vehicles. The DVM-250 Pro constantly records a 30-second

loop and in the case of a sudden change in speed, sudden stop, or other violent maneuver the recording continues

providing video and sound record of the event. These recordings can be used for driver training, personal

protection and monitoring as well as protection against liability workman.s compensation claims in the event of an

accident. The DVM-250 Pro is aimed at a general market that is several times larger than the approximately

450,000 law enforcement vehicles in use in the United States.

COMPANY PREPARES FOR CONTINUED GROWTH

In addition to the recent new product introduction, Digital Ally increased the size of its production/assembly facility

in the first quarter of 2008 to accommodate an anticipated expansion in product shipments. The Company also

reported that it more than tripled research and development expenses from Q107 as it targets new market

opportunities. Products include extensions of current products as well as new products.

CURRENT CAPITALIZATION AND CASH FLOW SHOULD SUPPORT EXPANSION

Digital Ally ended Q1 with approximately $4.9 million in cash, nearly $10 million in current assets and no debt.

For the year ended December 31, 2007 the Company generated $4.8 million cash from operations and spent only

$563K on capital expenditures. The Company does not have to spend significant capital dollars for production,

since most of the production is outsourced and assembly takes place at the Company.s Kansas facilities. In this

regard there should be minimal dilution of current shareholders from capital raises to meet the projections we have

prepared.

ESTIMATE OF FINANCIAL RESULTS

: (FY ends 12/31) (Dollar amounts in Thousands . Except EPS)

Year A Qtr A Qtr E Qtr E Qtr E Year E Year E

2007 3/31/08 6/30/08 9/31/08 12/31/08 2008 2009

Revenue $19,391 $8,601 $9,461 $10,407 $11,656 $40,125 $76,238

Net Income $ 4,523 $1,676 $1,929 $ 2,191 $ 2,457 $ 8,523 $15,525

Earnings/Share $ 0.28 $ 0.10 $ 0.11 $ 0.12 $ 0.14 $ 0.46 $ 0.82

"Market bottoms are like giving birth," jests Jim Oberweis, Jr. (http://www.thestockadvisors.com/ccount/click.php?id=1981) "The exact moment is hard to predict, but it is always painful. Though it sometimes takes longer than you’d guess, you know it is coming. And once it is over, it sure feels better.""March 2008 will likely prove to be that bottom," states the editor of The Oberweis Report (http://www.thestockadvisors.com/ccount/click.php?id=1981), who turns to two favored stocks that both provide products to the security and surveillance market."Digital Ally (http://www.thestockadvisors.com/quote.htm?sym=dgly) ( NASDAQ: DGLY (http://www.thestockadvisors.com/quote.htm?sym=dgly)) develops, manufactures and markets advanced technology products for law enforcement, homeland security and commercial security applications. "The company’s primary focus is the field of Digital Video Imaging and Storage and primary product is a reliable, compact, and inexpensive solid state in-car video system. "Digital Ally’s Digital In-Car Video system is primarily sold to municipal police, sheriff, and state police departments. The system utilizes digital recording technology and is integrated into a replacement car rear view mirror. "In the company’s latest reported fourth quarter, sales increased approximately 288% to $7.0 million from $1.8 million in the fourth quarter of last year. Digital Ally reported earnings per share of $.06 in the latest reported fourth quarter versus a loss in the same quarter of last year."Clients of Oberweis Asset Management own approximately 293,000 shares. These shares may be appropriate for risk oriented investors."FLIR Systems (http://www.thestockadvisors.com/quote.htm?sym=flir) ( NASDAQ: FLIR (http://www.thestockadvisors.com/quote.htm?sym=flir)) is a leader in the design, manufacture and marketing of thermal imaging systems. The company’s products are used in a wide variety of applications in commercial, industrial and government markets worldwide. "Typical applications include surveillance, force protection, drug interdiction, search and rescue, special operations and target designation. Thermal imaging systems detect infrared radiation and convert it into an electronic signal, which is then processed into a video signal and displayed on a video screen. "FLIR’s products are generally sold for commercial and industrial applications, typically where imaging and temperature measurement together are required. "In the company’s latest reported first quarter, sales increased approximately 47% to $236.9 million from $161.4 million in the first quarter of last year. FLIR reported earnings per share of $.24 in the latest reported first quarter versus $.18 in the same quarter of last year. "Clients of Oberweis Asset Management own approximately 275,000 shares. These shares may be appropriate for risk oriented investors."

A strong end to a firmly [More...]