If the election results and the President's sentiment toward Iraq are any indication, the federal coffers will open wide when it comes to military spending. In all likelihood, spending on defense equipment and troops will get a boost, and that's good news for Engineered Support Systems.
Engineered Support is actually a holding company for six subsidiaries that supply the U.S. military with everything from tanks and decontamination equipment to plastic faucets built to regulation. But wartime isn't the company's only boomtime. It also makes sorting equipment for the U.S. Postal Service and consumer plastic products.
The company's chief exec, Michael Shanahan, says orders are piling up as the U.S. gears up its military around the globe. Engineered Support recently collected an $8.5 million contract to supply the Air Force with heat pumps that also act as filtration and decontamination units for tents and triage shelters.
Engineered Support Systems has a seemingly unflappable growth streak. With nine consecutive years of rising earnings already under its belt, it's the kind of company that catches the eye of Thomas Barry, manager of Bjurman Barry Micro Cap Growth fund, which owns a hefty chunk of shares.
The company has little debt, and revenues and cash flow are growing just as fast as earnings. After a $2.50-pop on Wednesday, the stock trades at 19 times next year's consensus earnings estimate of $1.87 per share. Analysts expect a 17% annual growth rate, on average, over the next three to five years.
