On the web since 1997
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On the web since 1997 |
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The Rain Brings OpportunityLuke Hodgens / Powerhouse Profits -- Raincoats are only wanted when it rains, and after a couple of days of raining, you forget about the raincoat and stay inside. People are funny. What’s important one minute is often shoved aside the next… even though it may be needed. Such is the case with some defense stocks recently. It’s been raining on our military for three plus years. At first, we pulled out all the raincoats, now we prefer to ignore the rain and stay inside…but we can’s ignore it forever!Our “fix it now” society has been largely ignoring the long term implications not only of military operations, but of companies who supply equipment to our never ending war on terrorism. Although results of military operations are broadcast by cable news 24 hours a day, we’ve reached a point where we’re disinterested. People would rather watch anti-terrorist extraordinaire Jack Bauer, on Fox’s “24”, than watch the wonderful progress the U.S. military is making overseas… in the real world. After all, Jack Bauer saves America in just 24 hours…every season! This short-sightedness also translates over into the stock market and one industry in particular…military armoring for bulletproof vests and up-armored vehicles. Companies such as Ceradyne (NASDAQ:CRDN) and DHB Industries (AMEX:DHB), who provide ceramic armor to our troops have been ignored since the last week of 2004. In fact, since late December, both companies have traded one way…down. They both have hefty backlogs, great growth and a huge market share in their particular niche, call it great fundamentals. So why have such spectacular companies traded down, down, down? War has become unreal to us, and companies that manufacture for the defense industry have been ignored. We just want it all to go away. Maybe somewhere in our delusional minds it has gone away. Forget body armor, let’s have some Starbucks. This attitude offers us a huge opportunity. While the near-sighted have dumped defense shares, the long-term holders have a chance to accumulate more shares at cheaper prices. DHB is trading below $13 for the first time in months while shares of CRDN are below $27 for the first time in eons. Both companies traded down on improving fundamentals…they’re back off the radar screen! While these two companies continue to rake in the profits, average investors are largely ignoring them. They were the hot stocks of last year and are no longer trendy to own…perfect! At the current prices of DHB and CRDN, investors are going to be hard pressed to avoid these stocks; they’re just so cheap now. And once reality comes-a-knocking, these stocks will be back on everyone’s A-list. Armoring our military is not a fad but an expensive and lucrative must. Look for these stocks to begin climbing higher as heat is applied in Syria. Luke Hodgens is the editor of |
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