May 30, 2011
A decade after the 9/11 terror attacks, homeland security is still a growth business.
The niche—that includes James Bond-like tools such as infrared cameras, explosive detectors and body scanners—is expected to grow 12 percent annually through 2013, according to Morgan Keegan.
“Homeland security is reactive,” says Tim Quillen, a senior equity analyst at investment banking firm Stephens Inc. “The stocks are hedges against bad things happening.”
One example: the underwear bomber, who was thwarted in late 2009. After that a bell weather homeland security stock OSI Systems rocketed 30 percent within a month. “The stock went on a tear,” says Brian Ruttenbur, a research analyst at Morgan Keegan. Why? OSI makes X-ray and metal detectors used to scan people, baggage and cargo that it sells worldwide. During the past 12 months ending yesterday, the stock has popped from $25 to $40, driven by border and port growth.