Home / News / Weekly Roundup September 12 – September 16 2016: The Stock That Lifts During Rate Hike Chatter & more

Weekly Roundup September 12 – September 16 2016: The Stock That Lifts During Rate Hike Chatter & more

September 12 – September 16 2016

A Note From Our President & Founder Jim Garrettson

For those of us who follow financial markets and in particular U.S. GovCon stocks, let’s take a deep breath during this slightly slower Friday session and take a brief look at the wild volatility that has swept through equities.

Going back to last Friday the 9th, the benchmark S&P 500 has swung up or down at least one full percent in four sessions as investors try to both gauge U.S. economic health and set their expectations on whether or not the Federal Reserve will move interest rates up this month.

In turn, Executive Mosaic’s GovCon Index — of which 11 are also in the S&P 500 — has also added or lost a full percentage point in four days from five as the relatively more stable government contractor stocks are also getting swept in with larger trends in the market.

Interest rate speculation almost overrides any other factor in equities regardless of sectors but one government contractor stock in particular has seemed to benefit from the Fed chatter and a strengthening dollar that usually coincides with such talk.

Shares in SAIC — which does nearly all of its business with the U.S. federal government — haveclimbed nearly 8 percent over roughly one month and added 58 percent for 52 weeks.

We profiled the McLean, Virginia-based company in last week’s Roundup as a positive performer in both earnings and revenue that has also helped lift the stock.

As many analysts have noted, GovCon stocks are somewhat buffered from currency fluctuations and other economic headwinds due to relatively stable defense and public services spending graphs.

With respect to SAIC, its predominantly domestic-based revenue profile and customer base make the company even more insulated from global economic factors and a potential opportunity for investors worried about a strong dollar if and when rates go up.

In a May 25 MarketWatch column, Philip Van Doorn quoted a report from Jefferies analyst Steven DeSanctis that recommends investors look to companies that derive at least 80 percent of sales in the U.S. as an alternative to those that rely on exports.

DeSanctis selected SAIC and 26 other mid-to-small cap companies in his report as stocks that meet that criteria and others with a simple directive on how to think about this U.S.-leaning direction.

“A stronger dollar, better U.S. economy, higher rates, and higher volatility all favor domestic over foreign” investments, he says.

THE WEEK’S OTHER TOP 10 GOVCON STORIES

DISA Restarts $17B Encore III IT Vehicle Solicitation
New bids are due Sept. 30 after the agency made modifications to follow recommendations from GAO after a series of protests to the original solicitation.
Former CIA CTO Gus Hunt Joins Accenture as Federal Cybersecurity Practice Lead
Hunt led efforts to establish the CIA’s IT direction and implement the Amazon cloud prior to his retirement in 2013.
OPM Taps 4 Companies to Support Federal Background Investigations
Awardees received separate five-year contracts to work with OPM and the future National Background Investigations Bureau.
Former Parsons Exec Phillip Lacombe Joins STG Group as President, COO
Lacombe will lead the Reston, Virginia-based contractor’s work to identify new business opportunities in defense and national security technology.
Navy Picks 7 Firms for Cyberspace Research, Tech Integration Support Contracts
Work under the potential five-year contracts will include cyberspace science, research and engineering support to SPAWAR.
Rick Lober: Hughes, Airbus Segment Expand Military Satcom Tech Partnership
Airbus will distribute Hughes’ satellite networking technology and the latter company will market the former’s military satcom services.
Mike Leff: GSA Extends AT&T’s Network Support Services for Federal Sector
AT&T will continue its Networx contract services to GSA through May 2020 as the agency works to transition toward the future EIS program.
CAE Lands $91M Defense Contracts for Training Services, Simulator Updates; Gene Colabatistto Comments
Awards cover work for the U.S. Air Force, U.S. Navy and Austria’s military.
OSI Systems Buys American Science & Engineering to Grow Security Tech Portfolio
Hawthorne, California-based OSI paid $269 million for the maker of technology used to screen personnel, cargo and parcel.
DARPA Seeks Research Proposals for Small UAS Urban Surveillance Program; Jeff Krolik Comments
Industry has been asked for ideas on how to build sensors that detect and track small drones at less than 1, 000 foot-altitudes in cities.

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