investingfromtheright

I am retired and take educated guesses on all things financial.

February 09, 2007

February 11, 2007: Aero Defense/ Force Protection (FRPT)






The new USAF KC-X Tanker, the JTRS (Joint Tactical Radio System), the newest Boeing 747-8 and a version of the Force Protection Stryker





AeroDefense/Commercial aviation notes:


BEAV beat the street .28 to .29 estimate. Orders continue to roll in.

COL is doing the Boeing 747-8 avionics system.

NOC is bidding on the multi-billion KC-X program, to be awarded est. July. 07.

DCP beat the street .20 to .18 estimate.

Next week. Project HELIX (UK) LMT vs. LLL $900M.

Next week: AMF JTRS contract (BA vs. LMT).

late Feb.: LOGCAP IV (DCP, LMT, IAP, FLR) $5b.

March: Lawrence Livermore Lab Mgmt. (NOC likely) $8.9B/10 years.

March: Joint Cargo Aircraft -JCA (LLL vs. RTN) $1.7B.


Stock recommendations include:

BE Aerospace (BEAV)
Precision Castparts (PCP)
Boeing (BA)
Goodrich (GR)
Armor Holdings (AH)
DynCorp Int. (DYN)
General Dynamics (GD)
Lockheed Martin (LMT)
General Electric (GE)
TransDigm (TDG)

STOCKS ARE GETTING A BIT RICH IN THIS SECTOR, BUT THE END IS NOT IN SITE FOR SELECTIVE PICKS.



Force Protection (FRPT)

I have received a number of e-mails and comments from holders of FRPT stock. I was asked to comment on their board over at another prominent web site. I remarked extensively on the stock, indicating good, neutral and not so good aspects of the stock. I recommended selling some since the run up ($1.27-$24.30). Now trading around $19.00. In return, I received one line expletives, which may very well indicate the calibre of holders of the shares, but I digress.

Of four brokerages of note that follow FRPT, one has a hold, one has a sell and two have a strong sell according to tabulator Jaywalk. Reuters has a buy on it, as a news service opinion. It is ranked in the bottom 10% of desirable stocks in the industry. In the sector, it ranks in the bottom 1%. In the Jaywalk Universe of stocks it ranks in the bottom 1%. Their opinions - don't blame me.

Force Protection supplies badly needed mine armament-resistant vehicles and other protection for out troops. It performs a great function and is to be commended for that. I have three children and two of their spouses (five, for my FRPT pen pals) presently serving as active duty officers in the armed forces. I appreciate Force Protection more than many parents, I suspect. However from a strictly stock picking standpoint-

I stand buy my recommendation to holders of FRPT to sell some, maybe more than some of their positions. I believe the stock is priced to already account for near term contracts may be priced for perfection - that all contracts will go the FRPT way and that the Iraq War will last a lot longer. I do not believe either is the case. FRPT proponents are encouraged to respond.

FRPT is a stock I want to like. I just can't rationalize it going more than a little higher than it is now, conceding that I missed the last 2000% of it by not purchasing it for my Speculative Portfolio. And it may have a huge downside risk, due to product variety limitations and competition from other, larger, players.

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