<font color=green>**QSTI and Defense updates** - S.C.G. Writeup
From what I am hearing and seeing Questec is doing a few good things as of late, the new baseball season should start off with a bang!
The demand for services dealing with content in relation to gaming, entertainment and sports in general is on a rise. With new penetration in DSL, Satellite and Cable Modem Technology expect better returns than those who see this little company in a negative light.
Current recent legislation (as of two weeks ago) has opened the flood gates for those companies to get their broadband online to compete, this spells out more demand for content soon to follow as many go live!
What is every-ones options for broadband, let's see?
Currently I am less than 10 miles from the Anaheim Angels Ballpark and "The Pond" where the Mighty Ducks play hockey.
We do not have cable modem service right where I am, we do have DSL but just as of last week. Satellite cable is possible if you want to dish out $400.00 just to get the equipt, no pun intended.
DSL works like this here, (if it is even avail at your specific spot)
Sign up now, no 1 year contract
$29.95 first three months, then $49.95 per month.
Equiptment is free.
(A very good deal)
Being in a major city near one of the largest cities on earth you have to wonder why almost 50% of this area is barely connected. But it is like this way in many places.
Thus if Questec can make a buck and report a small gain or tiny loss with one large sport already online (ML Baseball) and a few in the works with many more sports to be brought online, stay tuned doubters! You will see earlier than later that we are not fairly valued at our current price of .07 in any possible way. (Of course this is only my opinion.) (Some need to be babysat as they do not know what an opinion is, please don't show how desperately you need your hand held)
------------------------------Defense Sector Update--------------------------
I still feel this sector will be on fire, this war is far from over IMO.
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Story Link= moneycentral.msn.com
Secret weapon: defense
Bears have warned that the market’s recent surge has reflected too much optimism over the potential for continued consumer spending and a revival in business spending this year. But both of those arguments ignore the plain fact that the Dow’s secret store of energy this year has come from shares of companies tied to military spending.
Indeed, you could say that defense stocks have turned out to be the cavalry of the 2002 stock market, leading the charge in a way not witnessed since the early ‘80s. United Technologies (UTX, news, msgs), Boeing and Honeywell (HON, news, msgs) are all up 60% to 80% since the terror attacks in September, adding ka-pow to the Dow.
Those three stocks could be done for now, as their exposure to commercial aviation may hamper progress. But many of their peers face the real prospect of double-digit earnings growth due to increases in Defense Department purchasing over the next five years. Bombs and missiles and guidance systems are the consumer non-durables of Planet Pentagon, and as both the war on terrorism and training for future wars progress, inventories are rising from extremely depleted levels and will need constant replenishment. Perhaps one day we will be bemoaning the “bullet bubble,” but for now it’s full speed ahead on the stockpiling of these companies’ products.
Paul H. Nisbet, veteran aerospace analyst at JSA Research in Newport, R.I., notes additionally that defense contractors are in some circles considered a safe haven from the accounting issues afflicting the rest of Wall Street. He’s got two reasons: First, earnings prospects are consistent enough not to compel managers to fudge to make their numbers. Second, all of their deals with the Pentagon are scrutinized by civil servants at the federal Defense Contract Audit Agency, which is believed to be much harsher than your local Arthur Andersen office.
8 stocks with promise
Nisbet, who has studied these stocks for more than 30 years, says he likes Boeing and Honeywell least among the Dow Jones Industrials defense stocks. But he likes plenty of non-Dow 30 defense stocks quite a bit, including large-caps Northrop Grumman (NOC, news, msgs), General Dynamics (GD, news, msgs) and Alliant Techsystems (ATK, news, msgs), Lockheed Martin (LMT, news, msgs) and Raytheon (RTN, news, msgs) and small-caps Curtiss-Wright (CW, news, msgs), EDO Corp. (EDO, news, msgs) and DRS Technologies (DRS, news, msgs).
The researcher, who sells his thoughts on the industry for as much as $3,500 per 30-page report, says he foresees a military buildup on the scale of the Reagan era. At that time, he said, the stocks ran for five years before peaking. In this case, he starts that clock in 2000 when investors first began to believe Bush could win election and began to bid these names up. “We have at least three years left,” he said. “Maybe four.”
Four more parallels with the Reagan era: Both followed roughly eight years of armed-forces deterioration in which Pentagon spending sank to 3% of gross domestic product from highs around 8%; both presidents ran their campaigns on rebuilding the military; both garnered public support via a single powerful negative event (for Reagan, it was the Iran hostage crisis); both followed recessions that made downturn-proof defense stocks look unusually attractive.
Nisbet believes the greatest growth will come in space weapons like the new anti-ballistic missile system, which could be ready to test its capacity to knock down an intercontinental ballistic missile by 2004. That’s the main reason Northrop has launched an expensive bid for TRW Inc. (TRW, news, msgs), the premier contractor in military spacecraft, satellite communications and high-energy lasers. And it opens the door to a surge in the many small-cap manufacturers of satellite, propulsion and space-communication sub-systems, such as DRS and Orbital Sciences (ORB, news, msgs).
Here’s a quick strafing run on Nisbet’s view of key stocks in the group:
Lockheed Martin. Much-improved management and well positioned for both military and space spending, with brilliant recent contract wins on all fronts. Expects 60% annualized earnings growth over next five years, in large part because of Joint Strike Fighter and F22 projects, but also due to its rebound from very low levels. Yet it is also the most expensive, trading at 22.6 times forward four-quarter earnings.
Boeing. Strong management from acquired companies McDonnell Douglass and Rockwell. Well positioned for future space contracts but more trouble ahead on the commercial jet side of the house. Earnings expected to be flat to down for the next two years, then better after 2003. Expects 5% annualized earnings growth over next five years. “Could do better but buying now is too risky.”
Honeywell. Management strong and improving with addition of new chief executive. Stock still a bit depressed following the failure of its merger agreement with General Electric (GE, news, msgs) and exposure to commercial aviation. Expects 12% annual earnings growth. “They will do well but we have them on our sell list due to risk on the commercial side.”
Northrop Grumman. Management is least liked on Wall Street because the chairman is aggressive and has pushed the company’s debt several times to the brink of junk status. Would nevertheless use recent decline in wake of the TRW merger bid to pick up shares, as 17% earnings growth is expected over the next five years and valuation is depressed relative to peers at a forward price-to-earnings ratio of 16.3. Chairman also expected to follow through on promise to reduce the firm’s debt-to-capital ratio sharply by end of year even if TRW is acquired.
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