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InVision: Bomb Detectors

02/21/2003 12:00 am EST


John Buckingham

Editor, The Prudent Speculator

Few advisors have received as many well-deserved accolades as John Buckingham, who was cited as one of America's top stock pickers by BusinessWeek while his newsletter, The Prudent Speculator, was selected as the best by Worth magazine. Here, he recommends a bomb detection equipment maker, InVision Technology.

"The good news just keeps coming for InVision Technology (INVN NASDAQ). Last month, the company issued another upward revision in guidance, with quarterly revenues now expected to be in the $210 million range, jumping from a prior forecast of $160 million, as explosive detection system (EDS) deliveries to the Transportation Security Administration (TSA) were increased to support meeting the deadline for checked baggage screening. In addition, the firm recently was added to the Standard & Poor's SmallCap 600 Index, and its Quantum Magnetics subsidiary was awarded $3.5 million for Phase 1 of a 28-month project to develop a landmine detection system situated on a moving vehicle for the US Army.

"Wait, there's more. The company was contracted by Siemens to provide maintenance and service for all InVision EDS in the US. If all goes as planned, the value of the contracts could be $30 million this year and as much as $300 million over five years. The agreements represent service for systems that are beyond warranty periods and the provision for 24-7 coverage for all installed systems. The company chose not to lift its revenue forecast of at least $400 million for 2004. Nevertheless, these contracts certainly can't hurt. With earnings of $3.50 a share likely in 2003, we think INVN remains a bargain, despite the incredible gains we have already made in this stock. We would buy INVN, with its debt-free balance sheet, up to $28.56 per share."

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