A Positive ID on a Growth Stock

One of the most important security functions in today's world is good identification. These days, a mistaken ID can mean a terrorist threat, stolen technology or compromised intelligence agencies. L-1 Identity Solutions (ID - commentary - Cramer's Take) has created a unique platform that helps governments and corporations meet security and identification needs in an increasingly sophisticated yet hostile world.

L-1 has developed and acquired a full array of biometric identification solutions that are tied to large functional networks. The completion of a number of recent acquisitions has given L-1 a breadth of functionality that puts the company in a strong position to expand its customer base.

L-1 has rapidly assembled a leading industry platform. The company had two acquisitions in its fiscal year 2005, five in 2006, three in 2007 and two during 2008. All of these companies or units were in the field of identity solutions and services. L-1 can now provide sophisticated biometric services such as full-hand scans, mobile ID products, biometric data mining and iris scans. Also, L-1 can combine these various technologies for "intermodel" applications such as combining retina scans with a fingerprint match or facial scans with biometric-data mining. These combinations, along with enterprise database services, give L-1 an advantage in the marketplace.

The company has a staked out a strong position in a potentially large market. The company operates in two segments. The ID solutions unit offers a large number of applications and includes services such as passport security, voter registrations, criminal bookings 3-D facial id, iris recognition and many others. The ID services unit provides project planning and technical solutions for employee access, security clearances and the enterprise-wide deployment of their use.

L-1 does business with major federal intelligence agencies such as the Department of Defense, the CIA and the National Security Agency and over 29 international governments and other state government and law-enforcement agencies. The company has over 5,000 credential and authentication systems deployed worldwide. L-1 currently has a backlog of over $1 billion, which is highly diversified in terms of applications and services.

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At the time of publication, Gear had no positions in stocks mentioned.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider ID to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Steve Gear was director of capital markets at Stockhouse.