This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Make Money on the New Mercenary Army

DynCorp also has quite a bit of debt left over from its private equity days and is dependent on a relatively small number of customers for the bulk of its income. And on the surface, the financials aren't all that hot, as the company earned just $3.9 million on $2.1 billion in sales over the past 12 months, posting a net profit margin of just 0.2%.

Yet if you look past 2007 results that were undercut by cost overruns on two projects and severance payments to a couple of ousted executives, you are now looking at a company with a large backlog that is likely to grow by at least 15% next year with margins of nearly 9%. With another couple of big contracts in the wings and a new CEO gaining the Street's confidence, I believe the business is fundamentally sound and the stock is cheap.

Considering that DynCorp will absolutely continue to benefit from the military outsourcing trend and win contracts that leverage its rock-solid back office, it's not hard to imagine that it will earn as much as $2 a share in 2010. Put a reasonable multiple of 16 times earnings on that, and you've got the prospects of a $32 stock in 24 months, or a double from here.

Armor-Clad Ambulances

Other choices? Sure, there are a few. Among highly speculative microcaps, I find Arotech (ARTX - Get Report) intriguing. The company is a leading supplier of armor to the Israeli Defense Forces and sells armored vehicles, including ambulances, for urban warfare around the globe.

4 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ARTX $3.12 -0.16%
CSC $65.90 -0.82%
HAL $43.97 0.34%
GD $136.46 -0.76%
KBR $14.44 0.07%

Markets

DOW 17,887.22 -89.09 -0.50%
S&P 500 2,077.91 -8.33 -0.40%
NASDAQ 4,925.7890 -21.6520 -0.44%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs