Magal Security Systems (MAGS) Message Board

Is this what you want?

ARTX next MAGS.. a big security company with Israel defense and homeland security deals. Headed to 15 to 20 bucks.

Arotech Corporation 2003 Revenues Nearly Triple Those of 2002
Tuesday March 9, 4:05 pm ET

Revenues Expected to More Than Double in 2004; Backlog for First Two Months of 2004 Already Exceeds Revenues for All of 2003
Arotech MDT Armoring Subsidiary Awarded $1.1 Million Armored Vehicle Contract for Iraq
[BRIEFING.COM -- Robert J. Reid] With security stocks running this week, we searched for secondary plays in the sector, flying below the radar screen. Arotech is a small cap defense company that has repositioned itself as a defense and security company with strong growth rates and is on the verge of being cash flow positive.

Email Us: If you have any questions, stock ideas or comments, email rreid@briefing.com.

Background
Arotech (ARTX 2.24 +0.06) is a defense and security products company, engaged in three business areas: 1) interactive simulation for military, law enforcement and commercial markets; 2) batteries and charging systems for the military; and 3) high-level armoring for military, paramilitary and commercial vehicles.

Key Points
New Focus: Last year, the co repositioned itself as a strong defense and security company, with products in growing markets.
Turnaround: The year 2003 was a turn-around year for Arotech. Just two months into 2004, the co already had a backlog of $17.6 mln, which is more than its revenues were for all of 2003 - and its revenues in 2003 were the highest in its history. The co believes that 2004 will be a year of increased revenue, EBITDA profitability and positive cash flow.
Strong Sales Growth: Revenues for 2003 increased to $17.3 mln vs just $6.4 mln in 2002, an increase of 170%. Although much of this is due to an acquisition. For 2004, Arotech anticipates revs in excess of $37-$42 mln. Revenues are projected to be stronger in the second half than in the first half, with revenues by quarter growing throughout the year.
Cash Flow Positive: Adjusted EBITDA improved in 2003 to a $(2.2) million loss vs $(3.5) mln for 2002. However, the co anticipates being cash-flow positive for the full year of 2004, with adjusted EBITDA profits beginning in the second half.
Bottom Line: Security stocks are receiving a lot of attention lately with increased security fears providing opportunities for traders to buy overlooked small cap names. We like how ARTX is trading, approaching a 2+ year high on increasing volume. The stock is very liquid with nearly 2 mln in average daily volume with a 6% short interest. The co is expected to double sales and be cash flow positive this year.
Note: Small Cap Trading Alerts is a new service where we will periodically present near term trading ideas. We caution readers that these ideas are generally more speculative and short term in nature, not appropriate for longer term investors.

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