To come up with the eight companies in the accompanying table, we applied a "Business in the Beltway" screen to our 2008 Fast Tech 25. In other words, we scanned the filings of the Fast Tech list to see which companies played up their business with the public sector, particularly the U.S. federal government.
Why do this? As we have often noted on Forbes.com, the fact that a company sells goods or services to the feds is no guarantee of its success. Nevertheless, it is not a bad idea to invest in technology companies that are going after government customers. Tech procurement has its flaws, but it can act as a seal of approval for vendors winning government contracts. That's why you'll often find smaller tech companies, for example, touting wins with a defense or civilian agency.
Consider also that tech buying cycles in the public and private sectors sometimes diverge, as they did dramatically after the dot-com bubble burst at the turn of the century.
A year ago, we zeroed in on MTC Technologies (nasdaq: MTCT - news - people ), touting the stock as a cheap government contracting situation on the Fast Tech list. For most of 2007, our call looked like a bad one, something we fessed up to in our year-end wrap up of 2007 Beltway bets.
Two days after our article about our 2007 Beltway picks appeared, BAE Systems (other-otc: BAESF.PK - news - people ) made a $450 million acquisition bid for MTC Technologies. The deal hasn't closed yet, but MTC shares show a 6% gain since our 2007 Fast Tech story, vs. a 7% decline for the S&P 500.
Full story at F0rbes.com
Friday, January 25, 2008
Wednesday, January 16, 2008
Beltway Bet: Beaten-Down Detica
Thomas Black, chief executive of British tech consultancy Detica Group, has 200 employees tending to civilian government and military clients in the U.S. He wants to bring that number up to 1,000 in the next few years.
"That is our ambition," says Black, Scottish of origin and 48 years of age.
But lately, such lofty ambitions haven't been reflected in Detica Group's share price. The London-listed stock has dropped 12% (in U.S. dollar terms) thus far in 2008 and 53% from a 52-week high of $8 last July.
With the sell-off, Detica shares look interesting.
Why the stock drop? Detica's customer mix is one culprit. Founded in 1977 as a boutique providing information security services to U.K. defense customers, Detica specializes today in business intelligence--the analysis of huge amounts of data to weed out fraud, manage risk and gain competitive advantage.
Government clients still account for three-fifths of the company's $307 million in revenues for the year ending last March. But 27% of Detica's sales came from financial services clients. Given the grim parade of big banks posting subprime-induced losses, the concern here is that spending on things like business intelligence will freeze.
There are also doubts about the public sector side, notably Detica's plans to push into the U.S. market. Last spring, the company created its DeticaDFI unit with the acquisition of DFI International, a 200-person Washington consulting group focused on budgets and counterterrorism. Building from there could be tough.
Full story at Forbes.com
"That is our ambition," says Black, Scottish of origin and 48 years of age.
But lately, such lofty ambitions haven't been reflected in Detica Group's share price. The London-listed stock has dropped 12% (in U.S. dollar terms) thus far in 2008 and 53% from a 52-week high of $8 last July.
With the sell-off, Detica shares look interesting.
Why the stock drop? Detica's customer mix is one culprit. Founded in 1977 as a boutique providing information security services to U.K. defense customers, Detica specializes today in business intelligence--the analysis of huge amounts of data to weed out fraud, manage risk and gain competitive advantage.
Government clients still account for three-fifths of the company's $307 million in revenues for the year ending last March. But 27% of Detica's sales came from financial services clients. Given the grim parade of big banks posting subprime-induced losses, the concern here is that spending on things like business intelligence will freeze.
There are also doubts about the public sector side, notably Detica's plans to push into the U.S. market. Last spring, the company created its DeticaDFI unit with the acquisition of DFI International, a 200-person Washington consulting group focused on budgets and counterterrorism. Building from there could be tough.
Full story at Forbes.com
Wednesday, January 09, 2008
Stocks For A Democratic White House
Just over a year ago, we presented perspective from Stuart Sweet, president of Washington research firm Capitol Analysts Network. He gave us several industries with a favorable political outlook, and we did some screening within them.
Those picks have posted an average return of 22% so far, versus a 0% gain for the S&P 500. Sweet, a former Hill staffer with a business degree, advises investors on sectors that could get rattled or revved up by politics and activity inside the Beltway.
So, sticking with what works, we're consulting with Sweet again. Broadly speaking, Sweet is bracing his clients for a Democrat in the White House and expanded Democratic majorities in both chambers of Congress.
"It's a Democratic year," he says. "A 60% chance of a Democratic president sounds reasonable to me."
Why reasonable? In terms of the executive branch, one reason is history. Since 1960, Sweet points out, the party holding the White House has managed only once to hang on for three consecutive terms. That was Republican George Herbert Walker Bush, succeeding a two-term Reagan presidency that finished up with high approval ratings.
Things look different today. "If George W. Bush was facing voters," says Sweet, "he would be a sure loser."
Full story at Forbes.com
Those picks have posted an average return of 22% so far, versus a 0% gain for the S&P 500. Sweet, a former Hill staffer with a business degree, advises investors on sectors that could get rattled or revved up by politics and activity inside the Beltway.
So, sticking with what works, we're consulting with Sweet again. Broadly speaking, Sweet is bracing his clients for a Democrat in the White House and expanded Democratic majorities in both chambers of Congress.
"It's a Democratic year," he says. "A 60% chance of a Democratic president sounds reasonable to me."
Why reasonable? In terms of the executive branch, one reason is history. Since 1960, Sweet points out, the party holding the White House has managed only once to hang on for three consecutive terms. That was Republican George Herbert Walker Bush, succeeding a two-term Reagan presidency that finished up with high approval ratings.
Things look different today. "If George W. Bush was facing voters," says Sweet, "he would be a sure loser."
Full story at Forbes.com
Subscribe to:
Posts (Atom)
