The short term investing stock picks blog

In August, I wrote an article about the 3 Stanleys in the stock market: Stanley Works (NYSE: SWK), Stanley Furniture (NASDAQ: STLY), and Stanley, Inc (NYSE: SXE).  At that time, I said, hey there is no question here the other two are garbage and Stanley, Inc was the way to go.  Since that time SXE is up 44% and in December hit the mid-high $30s.  If anyone cares, in the same period SWK is down 12.4% and  STLY is down 21.0%.

Back in August, I noted that the main risk facing Stanley, Inc was the potential for it to lose its largest contract, its Passport contract, with the State Department.  Well, good news for the company is that  on 3/17 it was announced that SXE would keep its passport services contract with the government and it would now be worth $570 million over 5 years.  This is obviously significant for a company with a $660 million market cap.  I like this news to hey buoy the stock in troubled market times and look for it to hit a target of $33, or around 12% upside in the next 3 months.

The company has shown an impressive track record of earning contracts over the past year or so.  Analysts currently peg its long term growth rate at 28.3%, not too bad for a company with a trailing P/E of 30 (PEG ratio=1.0).  With continued success on the contract front, Stanley can look for an upside to $40, which it likely would have reached under ‘normal’ market circumstances back in December or early January.

Disclosure: I hold no position in Stanley, Inc.

This entry was posted on Thursday, March 27th, 2008 at 11:09 am and is filed under Potpourri. You can subscribe via RSS 2.0 feed to this post's comments. Responses are currently closed, but you can trackback from your own site.