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Magal Security Systems Ltd. Message Board

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  • scratching_my_head2 scratching_my_head2 May 18, 2004 7:43 PM Flag


    Biker2003 you sound like an investor who is eager to learn. I am in the financial line of work so I understand how everything works.

    1. First thing you want to ask yourself is why does a stock move in one direction or another. The move up on this stock was a sector led hype or bubble. Happens all the time across many sectors. Homeland security was one and the most recent. I personally rode Mags from $19 to $38. I bought and sold several times since then. The stock moves up based on fear, hype, or just plain momentum.
    2. 2nd to ask did the stock keep climbing, did it stabilize, or did it sell off. In this case the stock sold off. When did it sell off. Right after earnings. Why did the earnings cause it to sell off. The revenues were weak, and the CEO was not to optimistic.
    3. 3rd question to ask. What will the stock do from here. The market is saying with all the fear with terrorists, the Iraq war, the summer security it's not enough to drive the stock price up.

    What has happened effectively the momentum investor's have left the volume is evaporating, and ALL the Homeland Security stocks have drifted lower. What keeps Mags up is the extra turmoil in Israel other wise it would be below $10.

    This I can assure you if there is another terrorist strike similar to the Spain strike or a strike on US soil, buy all the Homeland Security you can afford.

    Mags is a steady company, but it's average at best. The contracts are just not translating into revenue. So that tells me Magal's customers are not growing rapidly enough to be a growth stock. The balance sheet is nothing to jump up and down about. The float's low so it will create artificial squeezes on momentum runs. Magal's good during a homeland runup, but as a stand alone company your better off investing in a high growth high return company like Qcom or Brcm. Hope this helps, and thanks for asking.

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4.95+0.01(+0.18%)Jul 22 3:56 PMEDT