Today’s blog is a follow-on to my last post and it involves a defense stocks that may be worth “taking a look at”.  The star of the bunch is a  stock that is very well known in this sector, Taser International (TASR).

TASR has a long history in this niche and is a very recognizable name….not always for the right reasons.  Their mission is an honorable one (from their website) :  “TASER provides advanced Electronic Control Devices (ECDs) for use in the law enforcement, medical, military, corrections, professional security, and personal protection markets. TASER devices use proprietary technology to incapacitate dangerous, combative, or high-risk subjects who pose a risk to law enforcement officers, innocent citizens, or themselves in a manner that is generally recognized as a safer alternative to other uses of force.”

TASR, as a stock, has been both a meteor and a rock.  From its IPO price of $6.00 in 2001 to its high of $154.00 in early 2004, this stock was the darling of the market.  The stock was so hot, in fact, that it had THREE stock splits in 2004 (a 3 for 1 and two 2 for 1′s)!    Then a series of poor business decisions (Auto Taser, anyone), some very bad publicity and very strong selling dropped the stock precipitously.  The stock has over the  last 5 years trended down.  In the last 52 weeks, the stock hit its 52 week high in late September of 2008 and then dropping like the proverbial rock it hit a historic low of $2.54 in November of 2008.    The stock has proceeded to make turtles of its chart over the past 6 months.

I am still bullish on the stock, however.  I took a look at their financials and key statistics and came away impressed.  They have a very solid cash position, no long term debt (which I like), and solid revenues.  They did show a small operating loss in the most recent calendar quarter, but I see that as more as a blip than a trend.  What is most encouraging is that they are well diversified in several strong, recession resistant (is anything recession proof these days?) markets (law enforcement and military).  Another encouraging sign is that their short interest ratio has declined significantly of late.  It is trading under both its 50 and 200 day moving averages and Stochastics indicate that this stock is oversold.  I am putting my money where my mouth is and buying 1000 shares in my e-Trade account.

To bring Jack Bauer back into the mix, he would really like TASR’s products!  I have seen both bad and good guys reduced to quivering mounds of Jello by being “TASERED” on his show.  Then after a period of incapacitation, the person is as “good as new”.  However, when Jack shoots someone with his regular gun they usually stay very dead.  I wonder if TASR does product placements on shows like 24?  Might be a good idea.

Other small-cap defense stocks that  you can take a look at are:

ASTC – helmed by T. Boone Pickens III, this stock is not doing much to attract the interest of traders.  It trades in the $1.00 region, but has limited volume.  It appears that the company lives and dies with the NASA budget, so that might be a concern for the company’s long-term prospects.

KRSL  – Trading around the mid $3′s, KRSL has a good chart that bears some study.  It is not a very exciting company.  They are metal benders (metal fab company) that sells into both high-end military and commercial applications.  They have the same problem as ASTC…little or now trading volume.
This season’s cliffhanger had Jack on his death bed barely clinging to life.  Since they haven’t cancelled his show, I am sure he will be back for another rip-roaring season.  I can’t wait.