Weighing SafeNet’s Dangers

WASHINGTON, D.C. – A wary analyst community awaits SafeNet’s second-quarter financial results, set for release Wednesday evening. The last four earnings announcements from the Belcamp, Md., information security concern have fallen short of Wall Street expectations, and at a recent $15, the stock has lost three-fifths of its value since a high set in October.

Adding to the gloom: the overhang of an investigation by the Securities and Exchange Commission into SafeNet’s stock option grants. The company got a related subpoena last May.

With the slide in its stock price, SafeNet’s $364 million market value is now well below its book value, while its price-to-sales multiple is 1.4. The North American technology sector as a whole goes for 1.6 times revenues. Contrarian investors, particularly those interested in government contracting plays, may want to take a gamble on this beaten-up stock.

Full story at Forbes.com

Generating Hydrogen, Battling Earmarks

WASHINGTON, D.C. – It’s been a busy week on Capitol Hill for those interested in hydrogen as an energy source.

On Thursday, the U.S. Fuel Cell Council, an industry group, holds its annual Congressional expo, complete with a caucus room full of company exhibits and rides in hydrogen-powered vehicles.

The Senate Committee on Energy and Natural Resources heard testimony on Monday from Chevron and General Motors execs on the implementation of the hydrogen and fuel cell provision of last year’s Energy Policy Act.

“We still need major technological advances to ensure hydrogen can be affordable, safe, cleanly produced and readily distributed,” said Sen. Lamar Alexander, R-Tenn., at the Monday hearing.

Just across the river in Alexandria, Va., H2Gen Innovations’ 40 employees are advancing all those goals. The company’s tale illustrates both the promise of the hydrogen economy and the hazards involved when the feds turn to the private sector for research and development.

Full story at Forbes.com

Israel’s War Discount

WASHINGTON, D.C. – Feeling contrarian and in the mood to bargain hunt? Go for U.S.-listed shares of Israeli companies. The accompanying table lists a few notables.

We’re not downplaying the present difficulties in the Middle East. In fact, we’ve heard firsthand of nervousness among Israelis and the multiple threats to the country’s economy: people staying close to home or in bomb shelters, a sluggish tourism industry and the disruption of port activity in Haifa.

Full story at Forbes.com

Papers, Please

Washington, D.C., never wants for looming deadlines, and here’s a date that has Beltway bureaucrats and contractors scurrying: Oct. 27, 2006. That is when all federal agencies must be able to issue employees identification cards meeting technological standards demanded by President George W. Bush and developed by the National Institute of Standards and Technology.

“Everyone is working hard to meet this challenging deadline,” chirped a White House press release last week.

Whether everyone meets the deadline or not doesn’t matter much to Jay M. Meier, senior analyst at Minneapolis’ MJSK Equity Research. “If it’s Oct. 27 or March 27,” he says. “I don’t care.”

Meier covers a handful of technology outfits, several with an interest in credentialing: Fargo Electronics, Identix, LaserCard and Zebra Technologies. While his ratings vary among those stocks, he’s bullish on the identification business as a whole, deadlines or no. “The opportunity is so big,” he argues.

Full story at Forbes.com

Defense Play: Big, Cheap And French

WASHINGTON, D.C. – Investing, internationally or otherwise, requires making contrarian calls now and then. Thales, a French defense and technology concern, looks like one such situation.

Thales’ Paris-listed shares are down 25% from a 52-week high (a U.S.-listed depositary receipt is thinly traded over the counter and not sponsored by the company). By several measures of valuation, the stock looks cheap relative to industry averages for both European and North American aerospace and defense concerns.

It also looks reasonable relative to its own history. For example, it changes hands at 6.8 times cash flow (in the sense of net income plus depreciation and amortization). Over the last five years, the average is 8.8.

Full story at Forbes.com