Top 3 Israeli Security Plays
Written by: Aaron Katsman | June 7, 2007
By Aaron Katsman
IsraelNewsletter.com
Much has been made out of the various technologies that have come out of Israel. With Israel at the forefront of the war on terror for decades, security solutions to help combat terrorism have always been highly sought after. Many technologies, which were created with defense uses in mind, have worked their way down and now have a consumer application as well. There is no doubt that Israel has produced some of the best security technologies in the market today, and, as such, there are many attractive investment opportunities in this field. I would like to highlight three:
Nice Systems (NICE) is a security company that specializes in two markets: Security and Call Centers. Their security solution empowers security personnel to detect, prevent and respond to threats in real-time, and to investigate and reconstruct criminal and security cases using video surveillance and control services, incident monitoring, and reconstruction solutions. NICE is the market leader in providing fast and efficient solutions for the capture, storage, retrieval and analysis of customer interactions for contact centers and the enterprise. In the most recent quarter, revenues increased 33% over Q1 ’06. Operating margins in the first quarter were 15.0%, compared with 10.5%, in the first quarter of 2006. The company expects strong growth going forward, and, as an added surprise, if the US Dollar continues its recent strengthening against the Israeli Shekel, the company’s expenses should fall significantly, thus improving the bottom line.
Verint Systems (VRNT.pk) is a leading provider of analytic software-based solutions for security and workforce-enterprise optimization. Their solution generates actionable intelligence through the collection, retention and analysis of various communication networks. As a subsidiary of Comverse Technology (CMVT.pk) which has been embroiled in scandal, the stock has underperformed its peer group and is trading at compelling valuation, and is on many shortlists as potential takeover candidate.
ECtel(ECTX) , as I posted a few days ago, provides fraud management solutions in the telecom industry. The company did unnerve investors with a weaker than expected quarter, but with the growing demand for their solution, they look to get back on track in the second half of the year. In addition, Hewlett-Packard has had little success breaking into this field, and with HP’s affinity for buying Israeli companies, this could be a M&A target as well.
Disclosure: Author’s fund is long NICE, VRNT.pk as of 6/7/07. He does not hold positions in the other companies listed.
Please see our Disclaimer HERE.
Like what you see? Sign up to receive daily updates from IsraelNewsletter here
Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com
Share with others:
