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Can Cubic Weather the Storm?



November 21, 2012 – Comments (0) | RELATED TICKERS: CUB

Cubic Corporation (NYSE: CUB) had a summer full of foul weather.  The dark clouds formed in June with the death of their founder and CEO, Walter J. Zable at the age of 97.  The heavy rain swept in as accounting problems surfaced in August.  Still, the sun is peeking out this fall and the company's share price is up slightly since the start of 2012, as the federal and local contract awards have kept rolling in.  Is Cubic a good investment despite the stormy weather surrounding them?  Click for my full SWOT Analysis. To summarize:

Strengths:  Defense business lines in training, logistics, and support; a transportation business with a moat; international exposure; long-tenured leadership; a consistent dividend; and a strong balance sheet.

Weaknesses: Forced to restate their financials going back to 2009; over-reliance on one customer; and they're a small fish in the big pond of defense contracting.

Opportunities: Re-selling military concepts to civilian customers; new weapons means new training opportunities; open payment systems for public transit; and their NextCity vision.

Threats: The fiscal cliff and defense cuts; public relations threats; and they could be an acquisition target.


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