Force Protection Breaks Out: Put This Stock on Your Watch List
From Google Finance:
Force Protection, Inc. designs, manufactures and markets blast and ballistics armored vehicles for sale to military customers. The Company's specialty vehicles are protected against landmines, hostile fire and improvised explosive devices referred to as roadside bombs. Force Protection, Inc. produces three blast-protected vehicles: the Buffalo series, the Cougar series and the Cheetah series. The Company's facility, located 10 miles from the Charleston Air Force Base in Ladson, South Carolina, is on a 260-acre campus consisting of three manufacturing buildings with a combined floor area of approximately 452,240 square feet and an additional 90,000 square feet. Force Protection, Inc.'s primary customer is the United States Department of Defense, where it services two principal services, the United States Army and the United States Marine Corps. On December 15, 2006, the Company entered into a joint venture agreement with General Dynamics Land Systems Inc.
FUNDAMENTALS: Force Protection (FRPT) is a company that was bleeding red ink for many years (through 2005), but increasing demand for its V shaped, IED protection, combat vehicles have sent sales skyrocketing. So much so that the company is maxing out production capabilities and had to partner with the larger General Dynamics in order to meet demand. By posting its first profitable year, last year was a breakout year for the company. Earnings per share shot up from a loss of .40/share in '05 to a profit of .13/share in '06. That kind of growth is expected to continue through '07 with an expected earnings per share of .81. It's no wonder the stock has shot up more than 700% in the last year! Net margins are solid at around 9% and should continue to improve with manufacturing efficiencies and greater pricing power. Return on equity has shot up as well over the past couple of years and stands at around 17%.
TECHNICAL: FRPT broke out of a base today with heavy volume to a new all time high. That kind of action is always bullish, but given the tremendous run-up it's had already and the current state of the overall market, I would be hesitant to initiate a position at these levels. Put the stock in your watch list and wait for a pullback to the 24 - 25 range. That would offer a much lower risk entry.
FRPT 1-yr chart:
Disclosure/Disclaimer: Author has no position in Force Protection (FRPT).
Tate Dwinnell
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This article has 3 comments:
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Dan Jacome
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623 Comments
May 11 04:33 PMSPAR essentially makes the undebelly for all those truck orders flowing into FRPTs coffers.
SPAR is interesting b/c it has also enjoyed a short squeeze & Cramer seems to favor it....I think SPAR could hit $1B market cap in
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Tate Dwinnell
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16 Comments
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May 11 06:36 PMSPAR is a good one too and much cheaper than FRPT, but both are way extended. As I write this Cramer was praising your call and predicting higher prices!? I see SPAR running tomorrow morning once again but I'd be hesitant to get into either one at these levels - except for a quick day or swing trade. Agree that any pull backs offer buy opportunities though.
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Dan Jacome
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623 Comments
May 11 08:57 PM