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DynCorp International Inc. (DCP) is a BUY
President Obama plays host to the 20 largest economies of the world this week for a meeting in Pittsburgh. While the fate of the U.S. dollar will definitely be on the agenda, world issues will almost certainly be discussed, too, if only behind closed doors. Topping the list will be America's role in Iraq and Afghanistan. Obama is making diplomacy a hallmark of his presidency. Last week, for example, he canceled an antimissile defense system in Eastern Europe. The move was welcomed by Russia, and perhaps it will result in Prime Minister Putin working with us to ease tensions with Iran. I expect to see more diplomacy of this type during Obama's tenure in office. The United States currently has a large defense budget. It takes a lot to keep our ships and planes running. But not all of our defense budget goes to hardware. A significant portion of the Pentagon's budget goes to support missions. And one of my favorite defense stocks, DynCorp International (DCP), of Falls Church, Virginia, is benefitting from this investment big-time. DynCorp works behind the scenes to support the U.S. military and diplomatic efforts on the front lines. The company's contracts with the U.S. government to train police officers overseas are the biggest source of its business, along with interpreting and translating services. Since DynCorp's biggest customers are the Department of State and the Pentagon, DCP's revenue stream isn't impacted by the recession or weak consumer spending. I love nosing around online for DynCorp company news, because every few days, another juicy government contract comes their way. Recently DynCorp received a contract from the U.S. Army worth $1.5 billion, engaging the company in a wide range of support services to U.S. troops in Afghanistan. If all goes well, the contract could be extended to total $7.5 billion across another four years. To be sure, business has been going very well for the company. Last month, DynCorp posted higher profits on increased sales for its first quarter of fiscal 2010 that ended on ended July 3. DCP reported profits of $20.6 million, or 36 cents per diluted share, a 15% increase over last year that beat Wall Street estimates by a penny a share. Revenue was up almost 10% to $785 million. Indeed, the outlook for DynCorp is very bright. This is a great time to buy the stock. The company revised up its full-year guidance based on recent contract awards, boosting revenue projections to a range between $3.3 billion and $3.5 billion in fiscal 2010, up from a range of $3.25 billion to $3.45 billion. DCP also raised its earnings target for the year. I expect big things from this stock over the next several months, so invest with confidence.
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DCP lands $600 million Army contract
| DynCorp International Inc. (DCP) Wednesday said the Department of the Army has awarded the company and its two partners, CH2M Hill and Taos Industries, a task order for logistics support for the Afghanistan-South Area of Responsibility under its existing LOGCAP IV contract. The task order value is $643.5 million for the one-year base period.
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| | | {loadposition contentad} | | | | | The task order has a base year plus four one year options with a total evaluated value of $5.874 billion. The Army has directed DynCorp International to begin task order performance immediately. Under the new task order, DynCorp International would provide existing bases within the Afghanistan South AOR with operations and maintenance support, including but not limited to: facilities management, electrical power, water, sewage and waste management, laundry operations, food services and transportation motor pool operations. DynCorp International will also provide various construction services for additional sites. {loadposition link_nowtime}
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