De-fense! De-fense!

Written by GSCR Staff   
Thursday, 04 April 2013 07:30

Good Morning.  When most portfolio managers talk about being ‘defensive’ they are referring to buying gold or some other commodity to temper the affect inflation on your stock investments.  In our case today, we are talking about playing defense within the confines of small cap stocks that have exposure to the U.S. Defense Department.

Tensions are high and troops in Asia are on alert with yesterday’s news emanating from North Korea that its Army had received ‘authorization’ to attack the U.S..  Before you go into hysterics, realize that this dialogue has been fairly consistent from both Kim Jong-Il and his son Kim Jong-Un in between shooting 38 under par and hanging out with America’s favorite weirdo, Dennis Rodman, respectively.  Add in the constant idiocy from Iran’s Ahmadinejad, and one could make a serious case for arguing the validity and existence of Napoleonic Complex.  But I digress…

In response, the defense sector has rallied.  For example, Northrop Grumman (NYSE – NOC) is up 9% in the last month and General Dynamics (NYSE – GD) up almost 6% in the since early February.  These stocks are obviously out of our typical market cap range, but we have uncovered a nice play in our space.

Innovative Solutions and Support, Inc. (NASDAQ – ISSC - $5.44) is a stock that first off, jumps out at us from a technical perspective with very bullish indicators for the short term in almost every form of analysis, and secondly has had solid momentum since the start of 2013, up over 50%. 

Innovative Solutions has a customer base comprised of the primarily US Department of Defense and commercial contractors, aircraft operators, aircraft modification centers, foreign militaries, various original equipment manufacturers, government agencies, defense contractors, commercial air transport carriers, and corporate/general aviation markets.  The company manufactures and markets flat panel displays for aircraft use, air data systems, altitude alert systems, and engine and fuel cockpit displays.  The company just celebrated its 25th anniversary and continues to innovate in its existing product line and expand its service offerings.

We think the momentum continues and the stock reaches $6.00 sometime this quarter.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. 

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. 

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com

Add comment
  • No comments found