Stock Option Advisory

Companies Benefiting from FAA Air Traffic Control Upgrade

According to a recent article in the Wall Street Journal, “Civilian air-traffic computer networks have been penetrated multiple times in recent years”. The article goes on the describe a disturbing incident in which hackers stole a network administrator’s password and used it to install malicious code on air traffic control computers. Security experts have identified vulnerabilities in current air traffic control software, 763 of which are classified as “high risk”. The potential for hacker to gain access to air traffic control has both the airline industry and the FAA worried about security. The question looming large in the minds of our legislators is, “What could happen if terrorists were to gain access to air traffic control systems?” Of course the question investors are asking is, “Which companies will benefit from the new air-traffic control upgrade?”

While there is little information at this time on which companies will win FAA contracts to improve security, there are several interesting companies involved in creating and maintaining air traffic control software. As the current software is updated and revamped to make it more secure, any of these companies could see an increase in business from airports all over the world as they respond to the recently exposed security concerns.

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1. Image Sensing Systems Incorporated (ISNS).

This company manufactures image recognition software for use in transportation applications, such as air traffic control. While not directly related to the security breach issues, Image Sensing Systems Incorporated could see a boost in business if they are asked to incorporate new security measures into their existing software.

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2. Flight Safety Technologies (FLTS).

Flight Safety Technologies is a start-up company with some innovative ideas in software, including AWSM, a system created to optimize spacing between aircraft in order to help air traffic control improve safety and efficiency. Trading for around two cents per share, FLTS is cheaper than a lottery ticket.

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3. ICx Technologies, Inc. (ICXT).

ICx Technologies specializes in sensor technologies for homeland security as well as commercial applications. One branch of this company specializes in “intrusion detection,” which is a hot catch phrase in air traffic control security at the moment.

4. Argon ST, Inc. (STST).

Argon provides systems for maritime defense, airborne reconnaissance, ground systems, tactical communications, and network systems and security. In an age when any airport can become a terrorist target, it only makes sense for the FAA to turn to a company that, like Argon, has extensive military expertise. Argon’s success with its military applications is evident in its financial strength. With diluted EPS of 0.26 for the first quarter of 2009, Argon is a stock that is easy to recommend.

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Stock trading of these companies might be risky, as they are small companies, however, a stock trading investor might consider portfolio insurance with stock options. Unfortunately, the only company discussed in this article which is supported with stock options is Argon ST. An investor can use stock options in for their trading system to protect against drops in the price of Argon ST’s stock. For example, a put option can be considered the same as stock insurance, if the price of the stock drops, the put option protects from a large loss. Additionally, an option trading investor could use an income generating stock options to make monthly income. Also, of the available options trading strategies, and investor could combine protective stock options with income generating stock options strategies, covered call investing, for example, to generate monthly income and also have protection.

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[tags] Wall Street Journal, FAA, security, image recognition, air traffic control, sensor, intrusion detection, maritime defense, airborne reconnaissance, network systems, IBM, Intl. Business Machines [/tags]

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