STOCK BULLETIN
 "Since 1996, Providing Essential Services for the CANSLIM Investor"

Saturday, December 11th, 2004 | 4:55 PM

Financials |  StockTalk |  News | Chart  |  SEC |  Zacks Reports   

Armor Holdings, Inc. (AH $44.60) is a leading manufacturer of specialized security products and services for the US and international militaries, law enforcement agencies, multinational corporations and individuals.  The company has become well known as the Army’s sole supplier of the heavily armored Humvee models.  The armoring of Humvees for Iraq and the supplying of armor kits to vehicles already in theater have in part resulted in four consecutive quarters of sequential growth.  Management is forecasting fourth quarter revenue in the range of $288 million - $308 million, translating into sequential growth between 12% - 20% and a rise of 157% - 175% versus the comparable quarter a year ago.  Armor Holdings is listed just above 2/3 deep in the IBD 100 and it hails from the Commercial Services-Security/Safety group that ranks in the 95th percentile of all groups tracked by the paper. Insiders control 13% of the shares outstanding, keeping their interest aligned with shareholders.  Furthermore, institutional sponsorship has been on the rise with the number of top rated mutual funds owning the security climbing to 149 by the end of September from 90 at the end of last year.

What to Look For and What to Look Out For: A confirmation day and continued rise above the $45 is worth watching for as a nice reassurance that institutional buying demand is present and perhaps able to make for a sustainable and meaningful advance.  Failure to convincingly follow through with additional gains on above average volume would be a concern.  Strict discipline at a 7-8% loss should protect you in the event the stock drops near or beyond its ascending 50-day moving average and support residing at the $40 area.

Technical Analysis: On September 24^th AH vaulted above prior resistance for a new high close and it soon followed through with confirming strength on 9/30 and 10/01 which peaked in intra-day trading on October 3 at $45.03 before ending that session near its low of $43.40.  Note that reversal day and poor finish ultimately set the stage for a trip back into its prior trading range, and study the big volume on 10/20 & 10/21 as it fell hard, hitting and violating its 50 DMA.  It never threatened it 200 DMA near $35, but it had clearly dropped back into its prior base.  Its 11/5 gap up lifted it back above its 50 DMA and back above $40, which has been followed by mostly positive action.   That includes a prompt bounce at its 50 DMA support again in the past week.  On December 9th and 10^th (when it gapped up and closed at a new high close) buyers regained control, pushing the stock from support in the $40 area to a close just below the pivotal $45 mark.  Volume ran well ahead of its average pace on those sessions providing a clear indication of institutional activity. 

Additional Comments: Companies with military exposure pulled back as the November 2 election approached.  At the time, pollsters were calling the election between President Bush and Senator Kerry to close to call.  The rationale among investors was that a win by Senator Kerry would be detrimental from a military spending standpoint.  With the uncertainty of the election removed with the re-election of President Bush, stocks rallied sharply with defense companies among the main beneficiaries.  The catalyst for its latest rise stemmed from numerous news reports which raised the question of adequate vehicle armor for troops deploying in Iraq.