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Versar: Pump Up the Volume

(Updated with comment from Versar over contract details, fresh stock quote and volume move.)

SPRINGFIELD, Va. (TheStreet) -- Versar (VSR) shares climbed 35% Wednesday on heavy volume after the technical services provider said it was among several companies awarded a $3 billion government contract.

Versar said it is one of sixteen small businesses awarded a five-year, $3 billion contract by the Department of the Air Force's Center for Engineering and the Environment, or AFCEE. The five-year contract will have an eight-year performance period and be worldwide in geographic scope, the company said. Since December 2003, Versar has completed more than $35 million of work for the AFCEE.

Versar shares were rallying sharply higher on big volume, rising $1.27, or 34.5%, to $4.95. Earlier, the stock touched an intraday high of $5.70. More than 1.2 million shares changed hands in the first three hours of trading Wednesday, compared to the stock's three-month average daily volume of 16,290, according to Yahoo! Finance.

Versar has a 6.8 million-share float with a small short interest float of only 0.1% as of Aug. 11, according to Yahoo! Finance. Nearly 19% of the company's shares are held by insiders and another 33% is held by institutions.

While some argued Versar is still undervalued, most investor posts on Internet message boards expressed concern with the way the company's press release was written. Traders said the release was confusing whether Versar was awarded one of several $3 billion contracts, or whether it would split one contract with 15 other companies.

"The $3 billion is the contract capacity for all 16 companies," said Michael Abram, Versar's senior vice president told TheStreet.com. "So all 16 companies will be part of that, assuming the Air Force allocates the whole $3 billion over the eight-year ordering period."

Other investor posts argued that the relatively small float means daytraders could push the stock price even higher.

Read more about today's high-volume stocks like Terrestar in earlier "Pump Up the Volume" posts.

-- Written by Robert Holmes in New York.

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