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02/07/2003 12:00 am EST


Neil George

Editor, Profitable Investing

"The Defense Advanced Research Projects Agency (DARPA) has been around for years; as part of the Pentagon, it's always on the lookout to fund or buy the newest warfare and espionage technologies," notes Neil George, editor of " One of the new initiatives is the Total Information Awareness (TIA) project, which will take legions of Internet and communications experts." Here's one beneficiary.

"The TIA project seeks to empower the government to really know everything we do and say. To get there, they will need to build an infrastructure that can monitor the web, phone lines, and over the air communications.T his means big bucks. Companies that employ the guys who know how to make all those wires and airwaves sing will be front and center with DARPA and its TIA. From hardware that sniffs out information from wired and wireless to software that allows spooks from the Department of Defense and the National Security Agency to figure out what is going on around the nation, this will all be in high demand. Next to defense hardware, communications and system integrators are the new treasure trove.

"One of the systems integrators that already works with the Pentagon, thanks to its nearby Arlington location, is CACI International (CAI NYSE). While less than a dozen market analysts follow the company, it's not quite yet famous, making it a good pick. CACI is already one of Uncle Sam's biggest info tech companies, meaning that if the US wants to spend even more billions on systems and electronic gizmos, the sales guys and gals of CACI will be the first in the door to cut a deal. The shares have been scraped off the floor during the past couple of years as defense spending has led some investors to take a chance on this company. CACI shares have been down a bit recently, making it cheap in the near term as well. And contrary to many of the techies of the market, CACI is still a reasonable to bargain value, with a slight premium to trailing revenues. Even before TIA gets fired up, those revenues are climbing by more than 20%. Buy CACI up to an initial target of $43."

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