|
Hi-Shear is flying high
Defense Market Report
Exclusively for InvestorIdeas.com
By James Smith
July 19, 2006
Performance of small cap stocks is inherently volatile as movement is often predicated on a single or several orders rather than the sustained activity over multiple sectors experienced by major players.
advertisement
But one company that stands out is Amex-traded Hi-Shear Technology Corp.
The California-based company manufacturers fastening equipment, including pyrotechnic initiation and separation devices and electronic products used in applications from strategic missiles and tactical weapons to satellites and the rockets that launch them. Fighter and bomber aircraft flown by US and international air forces use the company’s ejection seat control unit and impulse cartridges for emergency pilot ejection. But the small company doesn’t have all its eggs in one basket. Hi-Shear also provides equipment to NASA, including a standard initiator which is used to power a myriad of key functions on each launch of space exploration vehicles, the Space Shuttle, and other national and international space missions.
Hi-Shear posted exceptional results for the third quarter, ending February 28. Revenues were US$6.2 million, 84 per cent higher than the corresponding period a year earlier. Net income for the quarter was US$715,000, or 11 cents per share, as compared to US$173,000 or three cents per share for the same period last year.
Revenues recognized during the nine months ended February 28, of US$16 million, 39 per cent higher than the US$11.6 million recognized during the same nine-month period last year.
Net income for the nine months ended February 28, rose 66 per cent to US$1.73 million, or 26 cents per share, as compared to the net income of US$1 million, 06 16 cents per share, for the same nine-month period last year.
The growth in revenues and net income resulted from increased production of national defense products and both space vehicle and satellite components.
While analysts are often worried about the impact of possible defense cutbacks – although defense spending has increased by an inflation-adjusted 55 per cent since the current administration took over the White House – Hi-Shear benefits from an increasing number smaller and cheaper satellite launches by both the military and telecommunications industry.
Hi-Shear also benefits from its smaller size, allowing the company to chase US$100 million contracts that are too small for larger players.
Hi-Shear projects 2006 full-year revenues of over US$17 million, increasing to US$21 million in 2007.
The company has recently been awarded contracts by DirecTV Group related to an upcoming satellite launch as well as a group of extremely high frequency satellites the US Air Force will begin launching in 2008.
Hi-Shear has diversified into other areas, including providing equipment for a US Navy project to use sound waves to locate and detonate mines and developing equipment that protects against misfires involving the US Army’s Patriot missile system and the Israeli military’s equivalent.
On July 18, Hi-Shear traded at US$14.65 per share, compared to a 52-week high of US$18.90 on July 5, 2006 and a 52-week low on November 17, 2005 of US$2.54.
Disclaimer
James Smith is an independent columnist for this web site. James Smith may hold long or short positions in any of the stocks mentioned in this article and those positions can change at any moment.
InvestorIdeas.com Disclaimer:
www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not affiliated or compensated by the companies mentioned in this article. James Smith is a freelance writer. Nothing in the articles should be construed as an offer or solicitation or recommendation to buy or sell any specific products or securities. Past performance does not guarantee future results.
|
