(February 14, 2004)
| Day Recommended 02-14-2004 - .15 |
Up Over 6,667%! 12-08-2007 |
Due to the encouragement of our subscribers we have decided to on occasion review a non mining sector company. Through our connections & sources we come across often what appear to be excellent speculative contrarian plays in other sectors.
Our major thrust & passion will continue to be the review of gold & silver mining companies, but in the best interests of our subscribers who have been requesting diversification in other contrarian plays we will now share those opportunities that we run across that appear to represent excellent speculations.
Please continue to realize that these are speculations & our advice to you is to never, never put all your eggs in one basket. Spread the money you have allocated to speculative interests around & do not put a principal percentage of your portfolio in any one of these speculative plays.
Actually, our recommendation is to always diversify among many players & no matter how excited you may become emotionally over a stock pick never, never put all your money in only one play. The professionals always recommend investing in a minimum of at least 6 different companies & really more than that is not a bad idea depending on your resources.
Remember that making money consistently does not depend on the occasional stock pick that may go to the moon. Money is best made over the long haul by having a pre planned selling strategy where you sell a portion of your earnings as you meet your price earnings objectives.
And as we say over & over & over you have only made money when you have sold & the money is sitting in your bank account or under your mattress.
The following review is a non mining issue but a contrarian play that we feel is very much worth taking a look at.
An unfortunate fact of modern life is that the world is becoming militarized. The promise of a long-term peaceful global marketplace that prevailed during the 1990’s evaporated with the crash of the stock market and the events of 9/11. International tensions are being aggravated by economic strife, religious conflict, and the rise of terrorism. Military budgets all over the world are rising in response to increased threat of attack.
But this sad state of world affairs is also creating lucrative opportunities for investors in the military and security industries. It may seem cynical to exploit the problems of the world for profit but precious metals investments also thrive when the world is in chaos. Times of war and military tension often cause inflation and financial crisis. Both the precious metals and the military equipment industry benefit under these conditions.
Force Protection is a company that manufactures specialized equipment for the military.
Force Protection (FRCP.OB)
They do not manufacture weapons per se, but defensive equipment to protect vehicles from attack by landmines or ballistic missiles. Unlike many military equipment manufacturers, Force Protection makes products that save lives rather than kill.
This may make the company suitable for investors who are morally opposed to investing in arms manufacturers.
Force Protection manufactures a series of land and amphibious military vehicles that feature its proprietary occupant protection shielding. These products are sold under the “Technical Solutions Group” (TSG) subsidiary of Force Protection. The TSG product line consists of complete vehicles intended for personnel and equipment transport that are equipped with special armor to protect both the vehicle and its occupants against commonly used landmines and ballistic artillery attack. Target markets for these vehicles include military, security, commercial, and law enforcement applications.
There appears to be a bright future for armored vehicles in the commercial sector.
As globalization progresses around the world, more and more companies are starting operations in countries that have been ravaged by war. The search for minerals and energy deposits frequently carry prospecting teams into areas that may be infested with landmines or terrorists.
Companies must offer protection and security for their on-site teams in order to have continuity of operations. TSG vehicles can provide life-saving protection against such dangers. Once again, the sad state of affairs in the world offers opportunity for entrepreneurs and investors.
One of the key features of TSG vehicles is that they are built from industry-standard platforms. The vehicles are typically manufactured by Peterbuilt or GM as its prime source vendors. The vehicles use commonly available parts and accessories, allowing the buyer to easily maintain and customize them at low cost. Often manufacturers of military products use custom parts to restrict the buyer into high-cost parts and service contracts. Standardized components makes TSG products very attractive to buyers concerned about operating costs and maintenance.
Force Protection Inc. operates its manufacturing in a secure 85,000 square foot custom-built fabrication and integration facility in Ladson, South Carolina. This facility includes corporate offices as well as state-of-the-art manufacturing capabilities including heavy-lift cranes, shot blasting, paint booths, and metal fabrication. They also have a specialized sourcing and technical facility in South Africa where their proprietary landmine protection technology was perfected.
South Carolina welcomed Force Protection on its recent move to the Ladson facility. The state is committed to creating a good environment for its precious manufacturing sector and the quality jobs that they can provide.
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Force Protection Inc. was recently awarded the coveted ISO9001 quality control certification for its manufacturing operations. ISO certification means that the company meets strict international standards for quality control in design, manufacturing, and support. ISO certification is often required for meeting vendor requirements by many governments and international organizations.
This certification opens up new opportunities for the company.
The military equipment industry is one of the few manufacturing industries that the US still has a commanding presence.
From a strategic standpoint, it is critical that the US maintain its capability to manufacture defense-related materials and equipment and not outsource that capability to potentially hostile nations.
Because of this, US-based firms like Force Protection have some natural immunity to overseas competition, at least with respect to domestic markets.
The company went public in 1999 during the Great Stock Market Bubble. The company originally was formed to produce both land/amphibious vehicles and armored boats, but the boat division is now being downsized. 1999 was the greatest period ever for new stock IPOs and FRCP was eagerly bought up by cash-rich investors. Since that time the performance of FRCP has been, well, a disaster.
From a high of around $15 in 1999, the stock plummeted to around 10 cents and stayed there for three years.
In late 2003, however, Force Protection Inc. finally announced profitability and the stock started trading heavily with the stock price finally rising out of its long base. This kind of long-term chart is very appealing to market technicians who call this a “breakout”. Breakouts from long bases often precede big price moves and have been a common pattern among some of the best performing mining and tech stocks over the last year. We see a similar pattern emerging with FRCP.
Force Protection was essentially given up for dead by investors and long forgotten. Smart speculators look for opportunities in unloved companies at giveaway prices. A few years ago gold mining stocks were in the same situation.
Force Protection Inc.
9801 Highway 78, Building No. 3
Ladson, SC 29456
(843) 740-7015
investor@ir.forceprotectioninc.com
http://www.forceprotection.net/
Although the company certainly faces challenges ahead, the fact that they have survived through such a difficult period makes us believe that Force Protection is a good speculation on a company that is just now starting to make its mark in a burgeoning industry with a bright future.
Five Year Chart:
Penny stocks like these are certainly very risky, but if they come back to life they can provide stunning returns on relatively miniscule investments.
Revenues for nine months ending in Sept. 30, 2003 were US$3.4 million and net income over the same period was US$743,000.
One Year Chart:
Force Protection trades on the NASDAQ Bulletin Board. The company has around 114.7 million shares outstanding for a market cap of US$16 million.
Gold Letter believes Force Protection represents a very excellent speculation.
Force Protection (FRCP.OB)
We strongly encourage subscribers to do their own diligence on every issue we review. And we also recommend you to broaden your education by talking to a knowledgeable analyst.
Gold Letter recommends Steve Todoruk at Global Resource Investment.
Steve can also provide you with any additional trading symbols you may require.
Global Resource Investments Ltd.
Steve Todoruk, P.Geo.
Investment Executive
stodoruk@gril.net
(800) 477-7853
Gold Letter receives no compensation for this endorsement of Steve Todoruk & GRI.
Gold Letter, Inc.
David4054@charter.net
2-14-2004
Author/publisher does not trade stock of the company being followed for 30 days before & 30 days after an article is published. Readers are advised that the material contained herein is solely for information purposes. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Gold Letter, Inc. is not a registered financial advisory. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment related advice. All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Authors of articles or special reports contained herein may have been compensated for their services in preparing such articles. Gold Letter and/or its affiliates may receive compensation & or stock options for the right to publish & reprint & to distribute this publication. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
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