While the market may have been a little wobbly of late, SAIC, Inc. (NYSE:SAI) hasn't fallen victim to the market's volatility. In fact, if anything, SAI share have thrived in the recent marketwide turbulence, gaining nearly 25% since the beginning of the year. What gives? Perhaps it's best to go back to the beginning.
SAI is, in simplest terms, a technology contractor. It designs all sorts of computer systems, surveillance systems, and cybersecurity services for a variety of customers ranging from the government, healthcare providers, energy companies, and more. More than that, SAIC, Inc. is regarded as one of the powerhouses within the (yawn) boring but surprisingly-lucrative technical consulting and contracting industry.
That's not the interesting part about SAI to investors right now. What makes this tech-services company so compelling right now is the fact that it's a reliable growth company, and that doesn't look like it's going to change anytime soon.
For perspective, SAIC Incorporated's top line has grown from $10.07 billion in 2009 to $10.58 billion in 2010 to $10.92 billion in 2011 to $10.58 billion in 2012. Per-share income for those years ran from $1.08 to $1.19 to $1.47 to 2012's $1.54 (operating).
Analysts currently think this year's revenue is going to fall again, to $10.28 billion. Next year's top line is projected to fall again, to $9.92 billion.
Income is expected to deteriorate for SAI this year too, from 2012's $1.54 to $1.17. The pros currently feel the bottom line should improve a little - to $1.20 per share - in 2014, though a mere $0.03 (+2.5%) improvement in income is actually a little insulting.
It may also be an unjustified pessimism the market is seeing through, explaining the stock's amazing runup so far this year.
The pace of contracts SAIC is winning is quickening.... hardly jiving with the problems the market was sure would materialize after the sequester and other government budget problems. Part of those deals were the result of the fact that government spending on tech services didn't slow, nor is it really planned to. But, many of these deals are from overseas customers and private entities, most of which aren't as concerned as governments are about costs or spending.
The bottom line is, the market is pricing in pessimism in SAI, but the company is doing anything but back-pedaling on the sales and earnings front. While the stock has been oddly strong despite weakness from the overall market, as the company exceeds tepid expectations, the bulls should actually turn up the heat even more.
The SmallCap Network Elite Opportunity currently has a position in SAIC. If you want a deeper analysis of the company - or if you want to know when or if they decide to sell it - take a free two-week test drive.