Anti-Terrorism Boosts OSI Systems

11/14/2014 8:00 am EST

Focus: STOCKS

Jim Powell

Principal Analyst, Global Changes & Opportunities

In response to the sudden threats posed by ISIS, several new anti-terrorism programs are in the works, forecasts Jim Powell, geopolitical specialist and editor of Global Changes & Opportunities Report.

There is a great deal of popular support for tightening America’s borders and keeping a closer watch on the people who wish to cross them.

I think investors who would like to add another anti-terrorism stock to their portfolio should consider OSI Systems (OSIS).

The company’s security division, Rapiscan Systems, is the leading supplier of X-ray and gamma-ray scanners used in airports, seaports, and railroads around the world. The company also makes handheld sniffers to detect explosives and other substances.

The company’s scanners do more than is generally known. Sophisticated detectors and software programs can identify many hazardous materials within the objects being scanned.

In addition to their other applications, these systems are also being purchased by parcel delivery companies whose goal—with Washington’s blessing—is to scan everything they handle.

I am particularly pleased to see OSI address one of biggest challenges in US border security; inspecting semitrailers and cargo containers. Large-scale scanners are now being installed in major ports, a process that should take several years.

OSI also makes the full body scanners being used in major airports. In response to many protests about safety and privacy, the first machines are being replaced with equipment that uses a new technology that both the company and the TSA insist is safe, effective, and less intrusive.

Although all body scanner technology is controversial, the trend with them is clear: if one system must be removed, it will be replaced by another. The turnover benefits the company.

OSI Systems also has a Healthcare Division and an Optoelectronics Division that are providing products that are in demand. The company is profitable, it is signing many new government and private contracts, the stock is bucking the correction, and it should perform well over the long-term.

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