Kratos Defense and Security Solutions Inc (KTOS)

[chmcnfunds]

Kratos Defense: Major Orders Keep Rolling In For This $5 Drone Play

Jan. 7, 2015 3:36 PM ET | 1 comment | About: Kratos Defense & Security Solutions, Inc. (KTOS)
Disclosure: The author is long KTOS. (More...)


Summary

Kratos is very well positioned to benefit from growing demand for drones, cyber-security, and advanced security systems.
Kratos has a market cap of just about $300 million and appears very undervalued as not many investors are as familiar with this relatively small firm.
Kratos has been awarded a number of major contract wins in just the past few weeks, and it has a backlog worth about $1 billion.
A recent "strategic review" could mean that one or more divisions, or the entire company is "in-play".
This stock is too cheap to ignore at just $5, and multiple insiders have been recent buyers.

I recently wrote about Kratos Defense & Security (NASDAQ:KTOS) because I think it is not well known, deeply undervalued and a strong takeover candidate. As I explained in my original article on this company, it appears very well-positioned for growth because it offers products and solutions that are suited to protect against modern warfare and terrorism threats. This includes drones, missile and targeting systems, advanced surveillance systems, cyber security, access control systems and much more. I also detailed in my article that this company has a $1 billion backlog, and with the board of directors considering a strategic review, it could lead to the sale of one or more divisions, or even of the whole company. Here is a look at two of the most recent orders which follows up on other orders it has received (in just the past 4 weeks or so) which now total nearly $150 million (which is significant for a company with a market cap of just around $300 million).

On January 6, 2015, Kratos announced a $41.5 million award from the U.S. Air Force for several new modifications and an option exercise under an existing contract.

On January 5, Kratos announced a $26 million order for the deployment of a comprehensive security system for a major mass transit authority. Kratos will design and deploy specialized video surveillance and access control systems into a command and control center.

On December 30, 2014, Kratos announced it received three new contracts with a total value of about $40 million for satellite communication earth stations, command and control systems and other related products and services.

Kratos has received other major contracts in the past few weeks, which I detailed in this "update" article, including one contract valued at $72.3 million for unmanned aerial target systems. This strong flow of significant new orders appears to put the company in a solid position for the fourth quarter and beyond.

As shown below, multiple insiders have been buying this stock, which is just one more positive sign for investors to consider. (data sourced from Yahoo Finance)

Insider Transactions Reported - Last Two Years
Date Insider Shares Type Transaction Value*
Dec 12, 2014 LUND DEANNA H Officer 3,000 Direct Purchase at $4.60 per share. 13,800
Dec 12, 2014 DEMARCO ERIC M Officer 21,575 Direct Purchase at $4.63 per share. 99,892
Dec 11, 2014 CARRAI PHILLIP D Officer 2,500 Direct Purchase at $4.97 per share. 12,425
Dec 1, 2014 MILLS THOMAS E IV Officer 2,000 Direct Purchase at $5.06 per share. 10,120
Nov 28, 2014 JUDD JANE ELIZABETH Director 3,000 Direct Purchase at $5.13 per share. 15,390
Here are some key points for Kratos Defense & Security Solutions:

Current share price: $5.15
The 52 week range is $4.54 to $9.18
Earnings estimates for 2015: 48 cents per share
Earnings estimates for 2016: 78 cents per share
Annual dividend: n/a
Data is sourced from Yahoo Finance. No guarantees or representations
are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for
informational purposes only. You should always consult a financial
advisor.
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http://seekingalpha.com/article/2804645-kratos-defense-major-orders-keep-rolling-in-for-this-5-drone-play?uide=996949&uprof=46

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