From Briefing.Com
BOMB-DETECTION EQUIP STKs It has been just over two years now since the bomb-detection equipment stocks
burst onto the scene, carried into the spotlight by speculation the explosion of TWA flight 800 was an act of terrorism. The
concerns set-off a call for heightened security at airports around the world. While the response by the U.S. government and
the FAA to increase installations of bomb-detection devices was certainly bullish for the makers of these products, we were
confident at the time that momentum driven names such as InVision Technology (INVN 6 +1/16), Barringer Technologies
(BARR 6 1/6 -1/8) and Magal Security Systems (MAGSF 2 3/8 -9/32) would, themselves, explode in investors' portfolios.
As the charts indicate, they have done just that. INVN---BARR---MAGSF These stocks have been primarily news
driven for the past two years, often erupting 10%-20% higher on reports of terrorist activity. Over these two years,
investors do not seem to have paid much attention to the fundamentals of these companies, though they happen to be very
attractive, particularly those of InVision Technologies. The Newark, CA-based InVision is currently followed by five analysts,
two of whom rate the stock a "buy," while the other three carry a "hold" rating. Given InVision's history of blowing away
earnings estimates and the stock's current discounted valuation, it would appear that analysts have downgraded the stock
based on its inability to retain gains posted after positive news. Point in case: This morning, INVN announced it received a
$3.8 million order from the Federal Aviation Administration (FAA) to upgrade all 59 InVision CTX 5000 explosive detection
systems (EDS) previously purchased by the FAA to the company's second-generation CTX 5500 DS product. After
advancing almost 13% in early trading, INVN shares have fallen almost back to the breakeven level.
Market Cap
1997 Sales
Yr/Yr Sales
Growth
Price/Earnings Ratio
(Projected '99)
Projected Growth
Rate
InVision Technology
$75.4 mln
$56.43 mln
256%
8.9
35%
Barringer
Technologies
$47 mln
$22.79 mln
109%
7.8
21%
Magal Security
Systems
$17 mln
$18.18 mln
6.4%
7.2
16% (1 analyst
surveyed) |
