Penny Stock Pick for February 7, 2006

Symbol: FRPT

Force Protection, Inc.

Company Location

Stock Information

9801 Highway 78

Bldg #2

Ladson, South Carolina 29456
 Phone: 843.740.7015

Current price as of close on February 6, 2006: $1.88
Buy Opinion: $1.76 - $1.98
Short Term Sell: $2.45 - $2.85
Long Term Sell (6-12 Months): $3.30+

Shares Outstanding: 35.4 Million

Quarterly Sales: $9.3 Million

 

 

 

Company Profile
 

Force Protection, Inc. manufactures ballistic- and mine-protected vehicles through its wholly owned subsidiary. These specialty vehicles are protected against landmines, hostile fire, and Improvised Explosive Devices (IEDs, commonly referred to as roadside bombs). Force Protection's mine and ballistic protection technology is among the most advanced in the world.

 

In July 2003, FRPT shifted its principal focus to the production of armored vehicles and moved our corporate headquarters to South Carolina. In August 2003, they changed their name to Force Protection, Inc. to reflect their focus on protected vehicles. In October 2003, FRPT negotiated and finalized an agreement with investors to divest all assets related to the Fire Rescue Boat Business. Effective January 1, 2005, FRPT reincorporated from Colorado to Nevada.

 

Headquartered in Ladson, South Carolina FRPT is a complete design-to-manufacturing organization, creating or licensing designs, and creating tooling, and parts necessary to assemble the products in-house.

 

They manufacture thier vehicles using proprietary technology derived from South African vehicle development programs carried out from 1972 through 1994, and incorporate design developments into the vehicles to improve their protection and functionality.

   

 

Highlights

Production Up 86%

Expanding Facilities

Doubling # of Vehicles!

Recent News Update (June 3, 2006):

 

 

 

 

 

New Business & Opportunities

 

Recently, on February 3, FRPT said today its production rate has increased by 86 percent since November 2005, led by record production numbers in January.

"This is the culmination of strategic planning and hard work," said CEO Gordon McGilton. "Mass producing vehicles of this type is a complex task. We are building the company to last, and that means maximizing our infrastructure to allow for high-volume production of our Cougar vehicle line, which is increasingly in demand."

Force Protection was awarded a joint contract in May 2005 for more than 120 Cougar Joint Explosive Ordnance Rapid Response Vehicles (JERRV) funded by the Pentagon's Joint IED Defeat Task Force. To accommodate this requirement and others, the company substantially expanded its manufacturing processes and production facilities.

"The increase in our average monthly output is a result of a systematic, consistent effort," said McGilton. "We have met or exceeded production expectations since November 2005. This reflects our commitment to becoming an assembly line manufacturer that can fully meet the needs of our customers."

Force Protection produced and delivered seven Cougar JERRVs to the U.S. Marine Corps in November 2005, followed by nine vehicles in December and presented 13 more in January. The company intends to increase its monthly delivery schedule as it establishes a steady rate of production.

"Our objective has been to establish a firm, steady rate of production which could then be duplicated to dramatically increase our production capacity to meet future demands," added McGilton.

While the Marines administer the Cougar JERRV contract, all four branches of the armed forces will receive vehicles.

"We are pleased to note that production of the Cougar JERRV is moving forward on schedule," said McGilton. "In addition, we would be remiss not to recognize that during this ramp up, we have also manufactured and delivered on time four Buffalo route clearance vehicles to the Marines."

Force Protection's vehicles are in active operation with U.S. and Coalition forces. While the company does not publicize the exact number or locations of its vehicles, more than 90 are currently deployed in Iraq and Afghanistan. Based on orders already received, that number is expected to double by June 2006.

 

 

 

In The News

 

Back in December, FRPT announced that its Buffalo mine-protected vehicle have been featured on the Discovery Channel in the United Kingdom and Canada. The Buffalo, which has been used by the U.S. military in mine clearance missions for more than two years, was dubbed “a fully-armored safe deposit box on wheels” in the broadcast’s Mean Machines series that aired during November 2005.

Discovery Channel noted that the Buffalo could withstand bomb blasts that would “shred a lesser vehicle.” Mine detection teams can examine and remove potential explosive threats by using a 30-foot robotic arm without leaving the safety of the vehicle’s steel hull, or by simply running over them.

“This vehicle is built to absorb explosive forces so that its passengers don’t have to,” said Force Protection Vice President Michael Aldrich. “Our objective is to protect the lives of U.S. and Coalition forces, which cannot be replaced, by sacrificing automotive parts that can be.”

Discovery Channel reported that the extraordinary strength of the Buffalo that allows it to run through mine fields undamaged is due to the blast protection technology incorporated into the vehicle. This includes a v-shaped design that deflects energy away from the hull, solid steel wheels, and five-inch-thick ballistic-protected glass.

“The Buffalo is designed to take multiple hits without experiencing disruption to its normal operation and function,” noted Aldrich. “We have had no fatalities in any of our vehicles to date.”

Both the U.S. Army and the Marine Corps use the Buffalo to detect and remove suspected explosive devices in Iraq and Afghanistan. There are over 50 Buffalos deployed with more in production or en route to active theaters of operation.

 

 

 

 

 

Conclusion

  

Force Protection seems to be on the verge of something great. While it did post a loss this past quarter, we've seen evidence of a large increase in revenues which will begin to hit the bottom line soon. FRPT had to expand its facilities to accommodate the larger orders and should be ready to profit from that shortly.

 

As mentioned, the company has 90+ vehicles in Afghanistan and Iraq and based on orders already in hand, that number could double in little more than a year.

 

As we all know, military spending is up, way up. The military doesn't make all of its equipment in-house. In most cases, everything from bullets to vehicles are purchased from companies such as Allied Resources, Boeing and Force Protection.

 

We expect to see a large jump in revenues and expect to see FRPT post profits this year, which could substantially increase over the next year or two. We feel that FRPT is an excellent purchase here as revenues are climbing, profits look to be just around the corner and business looks to be good (and growing) for the foreseeable future.