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02-06-2007 BLUE - Blue Holdings Inc

CURRENT PRICE: $1.64

TYPE OF PLAY: VALUE/TURNAROUND/TECHNICAL ANALYSIS

* Profitable company looking to expand margins by outsourcing in Mexico and Hong Kong effective for the current quarter with benefits realized in Q1.

* Prices/Sales ratio ~ 0.8 while industry peers such as TRLG trade at 2.9 times sales.

* Worldwide presence in key retail stores such as Saks Fifth Avenue, Neiman Marcus, Nordstrom, Barney's, Bloomingdales, Bergdorf Goodman, Macy's East, Planet Blue and Atrium. Japan is a particularly strong growth market for Blue Holdings.

* New brands, "Faith Connexion" and "Life and Death" already started to receive orders.

Blue Holdings is a rapidly growing designer and distributor of high-end fashion products which capitalize on current denim fashions within the U.S. and internationally. They design, manufacture, and market high-end vintage denim fashion jeans, apparel and accessories. Their top brands include: Antik, Taverniti So Jeans, Yanuk, Life and Death and most recently, Faith Connexion. Both Antik Denim and Yanuk brands have been seen on celebrities like Teri Hatcher, Hilary Duff, Jennifer Lopez, Jessica Simpson, Charlize Theron, Kate Hudson and many more. Additionally, Blue is expanding coverage through fashion layouts in trend-setting publications such as Elle, Life & Style, Glamour, Marie Claire, Lucky, Bazaar, and Nylon.

The company has made great strides to correct the issues that led to last years disappointing performance. The new Life and Death brand's first delivery to top retailers occurred on 12/15/06 and is expected to be a large contributor to increased business in 2007. New brands and especially their new outsourcing program should insure that they will remain profitable in 2007 (all other things remaining equal).

Technically, the stock has remained in oversold territory for several months and we are now starting to see a lift off of the created flat line base. With the stock trading much higher at this time last year, it is our belief that a solid turnaround quarter in Q1 will bring the share price back to a valuation more in line with industry peers.

LINKS FOR FURTHER READING:
BLUE homepage
SEC filings for BLUE
General BLUE statistics