Security is a major concern
I had a little extra buying power in my Wall Street Survivor portfolio so I went on the hunt for a new stock to add to that portfolio. As always I start on Barchart and screen for the stocks that in the last 20 trading sessions had price appreciations on at least 50% of those days. After taking the top 10 and doing some additional filtering I came upon Kratos Defense and Security Solutions (KTOS).
Since 9/11 I've noticed a great change in the environment in the US. I have to go through check points and security screenings that I never thought would happen. Even when I go to athletic events at public middle schools and high schools, I must open up everything and be wanded with a metal detector. When I go to local city and school board meetings I have to sign in, produce an ID and be screened by a metal detector. As I walk the downtown streets of Charlotte now instead of counting the number of Volkswagen beetles I find myself looking up and seeing how many security cameras I can find. It's almost like the only thing that they got wrong in the book 1984 was the date.
I'm not trying to make you uncomfortable but I'm trying to show you that this is a company that seems to be positioned to come up with solutions to what has become an ever consuming concern -- security.
They have 2 major divisions. The largest Kratos Governmental Solutions provides weapons systems advice to the US government plus state and municipal governments. One of their largest customers is the Department of Defense and they also advice those little armies we never had -- police SWAT teams. The second major division, the Public Safety and Security Division advises retail, health care, educational and municipal governmental entities on all the types of security concerns they might have. Now that you know the stock's story how about the numbers?
Barchart's technical indicators give a buy signal on 12 of the 13 indicators of an overall 96% buy rating. The stock has appreciated in 16 of the last 20 sessions and is 5 for 5 recently. The last 30 days has seen a 28.41% price appreciation.
Brokerage analysts predict that although they might only grow revenue by about 4.5% next year they should have an increase in earnings per share of 127.4% due to coming off a loss this year. They are looking of a 42% 5 year compounded growth rate in EPS. Not too shabby, they follow that up with 2 buy recommendations.
I like to know what the investor sentiment is so I usually go over to Motley Fool CAPS to see how their members are voting. The CAPS members think the stock will our perform the market by a vote of 96 to 2 with the All Stars voting 31 to 1. The Wall Street columnist Fool follow have positive articles 2 to 0.
Since the stock has a compelling story, positive technical momentum and a positive investor sentiment I'm adding Kratos Defense and Security Solutions (KTOS) to my Wall Street Survivor portfolio with all the appropriate mental stop orders around the 50 day moving average.
Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com
Disclosure: I have no position in KTOS at the time of publication