Patriot Act and Air Security Plays
10/24/2003 12:00 am EST
Terrorism is an unfortunate fact of modern life. And while it may appear opportunistic, various companies are positioned to benefit. Here are two firms poised to help, and profit, in the battle. One is involved in explosives detection equipment. The other helps banks comply with the money laundering provisions in the Patriot Act.
"Fundtech Ltd. (FNDT NASDAQ), a leading provider of payments, settlement, and cash management software and services. The company recently announced the introduction of AML Manager. The product will help financial institutions comply with international banking regulations related to anti-money laundering, such as the USA Patriot Act. The product enables institutions to detect, analyze, and report suspicious customer transactions, and can automatically file the necessary reports with the various regulatory agencies. Currently many financial institutions have multiple compliance systems that are incompatible and inefficient. AML Manager is a single platform for the entire enterprise, providing consistent enforcement and operating efficiencies. According to the firm, many financial institutions are frustrated by the growing complexity of new global anti-money laundering regulations, and this product offers an affordable option that will reduce operating expense by automating this ever more complex and labor intensive process."
"InVision Technologies (INVN NASDAQ) provides certified explosive detection systems used at airports for screening checked passenger baggage. In the three months following 9/11, the shares rose from $3 per share to $45. In August, InVision was rated as America’s Fastest Growing Company by Fortune. However, the market is not convinced. INVN trades for just seven times expected 2003 earnings of $3.39 per share. It is not often that investors can buy exponential growth at such a low valuation. Skeptical analysts do not believe that the company can sustain its growth and therefore forecast earnings in 2004 to decline to $1.58 per share. We disagree and think that the company should be able to maintain its growth of earnings in the future. For one thing, the company is moving aggressively to replace sales revenue with maintenance revenue. In addition, world sales have the potential to increase, even while US sales may slow. Buy up to $30; we have a target of $60."