FRPT

[nullzero]

If I had to guess I would say we would get a neutral to slight uptrend heading into earnings. After earnings are released I would expect a sell on the news situation to occur. I may short it depending if their arent better plays out there. I would say a short position in the 20-21s would be relatively safe with a cover target around 17-18s.

[TerryG]

And now there are five vendors. It will take a while to digest this one. But FRPT still thinks they are going to get the lion's share of the contract.

I shorted at 20. I guess this explains the after hours trading down to 19.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGvBh5B.CkZQ&refer=home#

[TerryG]

With five vendors, 38% (399 of 1049) of the 2007 budget contracted for the next three months. That leaves 52% or 650 vehicles remaining to be contracted for the four final months of this fiscal year. Leaving the 2008 fiscal budget, which must still come by October. It's a long shadow but it may work yet.

[TerryG]

Here is the breakdown.

1049 MRAP vehicles budgeted or requested for fiscal 2007. Including 36 test vehicles and contracts of 395 brings total contracts to 431 of 1049 vehicles. Leaving 618 vehicles left to be contracted for 2007.

Of the 395 vehicles, 205 were Category I and 190 Category II. All to be delivered in three to four months. Leaving 618 vehicles to be contracted this year.

The mix is different. FRPT is splitting the Category II contract: FRPT 60, BAE 75, PV 60, and GD 10. So it is a production horse race with FRPT, BAE, and PV. FRPT and PV have announced their production expansion plans. BAE and GD have not.

The plot thickens when you add Category I vehicles. OSH 100, BAE 15, FRPT 65, and GD 10. The good news is that FRPT got a Category I contract it did not anticipate. Also OSH has no Category II contract, and PV does not have a Category I contract. And BAE and GD contracts for Category I are small in comparison.

So it is a squeeze to maximize production, get them to IRAQ and get results. This is so thick only the Marines will know what they are going to do next.

The good news FRPT is still the largest share in addition previous production backlog of several hundred vehicles. I think FRPT is going to have to rethink their production plan of 100, 200, and 300 vehicles per month. Maybe return some of that expansion money and not issue more shares for it.

How FRPT will manage the risk of expansion costs and the remaining, uncontracted vehicles of 618 for this year.

It will be interesting to see FRPT's production plan for the rest of the year.

[TerryG]

An even wider range of possabilities. I hope it gets clearer.


http://news.moneycentral.msn.com/printarticle.aspx?feed=AP&date=20070226&id=6535868

In January, the Defense Department named a slate of companies awarded contracts for up to 4,100 Mine Resistant Ambush Protected vehicles for the Marines and other military services.

C.E. Unterberg Towbin analyst James McIlree said Force is seeing greater risk amid greater competition.

"Clearly the Marines continue to keep their options open, as well as pressuring all vendors to quickly bring up capacity," McIlree wrote in a client note.

But McIlree kept a "Buy" rating on Force, saying that the company will gain from the Marine's Mine Resistant Ambush Protected vehicle program, which has expanded from 1,200 vehicles to at least 6,700 vehicles for the Marines, Army and Navy.

[nullzero]

Nice on the short at 20! I didnt get in I kept saying I was but had my money tied up in some other stocks. Bought some more MSI and got into some dry bulk shipper stocks.

[la-onda]

FRPT: MRAP Update (From CEUT)
We reiterate our Buy recommendation and $25 price target on
Force Protection and continue to believe the company will be a
significant winner of the MRAP program. MRAP has expanded from a 1,200 vehicle program a few months ago and according to Marine sources is now expected to include over 6,700 vehicles for the Marines, Army and Navy. We have increased our revenue estimates for 2007 and 2008 to account for the
greater scale of the program. While the number of participants in the program is greater than we anticipated we continue to believe ultimately two or three vendors, with field-proven vehicles and productive capacity, like Force Protection, will end up with the majority of the task orders.

• We had originally anticipated limited deliveries of MRAP in 2007. For 2008 we had looked for the FRPT/GD JV to produce 720 Category 1 vehicles, 1,500 category II vehicles and 110 Category III vehicles. But this was on a program of 4,100 total vehicles. The program now is over 6,700 vehicles and on time,
which is very rare for any program of this size. And that still remains FRPT's competitive advantage. Our old estimates did not put too fine a pencil to market share since in our opinion, the program was in tremendous flux, likely to be increased and likely to be accelerated, all of which turned out to be true. We
have increased our 2007 estimates to reflect the delivery of the 125 vehicles awarded earlier this month and an additional 125 vehicles in Q4, which have not been awarded. In 2008 we are looking for 776 Category I vehicles and 1,569 Category II, about 50% market share of the total vehicles we expect awarded for each.

• The risks certainly are higher since the Marines have now awarded five vendors LRIP (limited rate initial production) orders. These orders are for "lower risk" bids in advance of testing in order to accelerate production.

• Our price target assumes a P/E of almost 25x on our 2008 EPS estimate of $1.05. Given the company's rapid growth rate, large addressable market and leading technological position, we believe both our multiple and EPS estimate could be low. Risks to achieving our target include a slow-down in spending for
Iraq, advancements by competitors and its ability to deliver on a significant increase in expected revenues and earnings. 

Bad day for a long, congrats for all shorts made some money today 
I will hold my shares...

cheers
O.

[TerryG]

Took my own advice and started a short position. My long position, I am keeping it also, it has paid for itself. I can take the pain, I have been here since the reverse split. 20 to 25 looks like a comfortable place to wait for.

Looks like enough volatility to make a short postion pay for itself while we wait. Considering up from 17 or a dip into 16. The 15.50 retracement would be the market selling for no reason. But who knows?

[Melf Elf]

I shorted at 20.

Terry,

You nailed that short entry in FRPT!  Applause.   

I haven't watched this one recently (wish that I had), but I want to follow up on the discussion that several of us had about shorting FRPT when it put in the 15.70 low back in early February.

Shorting FRPT there was "shorting into the hole," meaning that a lot of the gain on the downside already had been made, the short trade, essentially, had been missed.   That would have been a weak entry, short, because there was too much risk on the upside (it turned out to be a rally of more that 20%).

From that 15.70 low at Purple #1, we got the initial rally to 19.56 - 20.00 first resistance that we all discussed and expected, at Purple #2.  The high there was 19.58.

Then we got a selloff, to Purple #3, and then a rally to Purple #4.

At Purple #4, we had a "possible" Bearish Rising Wedge completed.  That's where we want to consider shorting a stock, depending on the overall chart and the technicals, and that's where you, in fact, did short it. 

Very nice! 

"Short rallies, back to resistance."

The 34/55RSIs also failed right there, at Bearish Synchronicity.  That's a technical indication that the short trade has a good chance of succeeding.  20.08 was the sell pivot.  The print of 20.07 was the sell signal.  I'll post that chart next.

Another nice place to have shorted FRPT was the gap down break of the Bearish Rising Wedge (pattern in purple), below 19.34, on Monday.  That was confirmation that the rally and the pattern had failed.   The open was 19.00, and that was the high on the day, so it might have been difficult to get short there because of the Uptick Rule, but that was another good entry short, if anyone could get it.

"Short pattern breaks, and breaks of support."

That break of the Bearish Rising Wedge put 15.70 IN PLAY (the bottom of the wedge) and 10.34 IN PLAY (measured move off the break).

FWIW, I take at least some profits when targets get MADE, and yesterday's 15.80 is "close enough" to the 15.70 IN PLAY.

Yesterday was another gap down, then an exact gap fill to the prior day's 17.00 close, then another selloff to the "possible" Bullish Doji Star Hammer close.

That's an "indecision" candle: are we going to put in a Double Bottom at 15.70 and 15.80 and rally, or are we going lower?  That's why I like to take some off the table at those junctures because I can't answer that question any more than the other players can.

A print of 17.01 today, a penny above yesterday's "possible" Bullish Doji Star Hammer, at least would hint at the fact that the bulls aren't out it yet, and that FRPT might rally a bit, but there's more resistance now than there was on the rally off the 15.70 low.

In addition to all of the candles since the 15.70 low, that now represent more resistance, the Kumo (Cloud), which is represented by the vertical lines, now is overhead resistance, beginning at 17.34.  At the 15.70 low on February 2, we can see that the Kumo (Cloud) was support, so that makes a rally more difficult this time.

Bulls still have a chance, though, but 15.70 - 15.80 looks to be important support here, that  needs to hold.

Nice play, Terry, and good luck!  I'll post the 34/55RSI chart next.

 

[Melf Elf]

34/55 RSIs.  The failure at Bearish Synchronicity and the break of the Bear Flag in this chart was technical confirmation of the failure, and break, of the Bearish Rising Wedge in the price chart.

[TerryG]

Thanks for the market reality Melf it looks like it is going to hang on.

Because with the management reality we are at before FRPT's expansion announcement with GD, exactly. With the split of the MRAP contract we are somewhere between before and after the announcement. So how many contracted vehicles and how much expansion will dictate upward again.

1. As always a favorable Q4 report.

2. The MRAP contract award was not as favorable as the optomistic view for which we have paid.

3. We have seven months to see the Fiscal 2008 budget and how much funding for vehicles it has.

So with a match in market and management reality we may be safe from this concurrent market sell off and economic slip.

I am still optomistic I was back in at 16 yesterday. Looks like the market wants to rethink 20, 50, 100 days, backward and forward.

[TerryG]

Well the Marines at Congress give me hope. Now if Congress will get on board.

http://www.baltimoresun.com/news/nationworld/iraq/bal-te.armor15feb15,1,637349,print.story?coll=bal-home-headlines&ctrack=1&cset=true

The decision to replace Humvees means the Marine Corps will increase its purchase of MRAP vehicles to 3,700 from the 1,022 it had said only last month that it needed.

[TerryG]

Back out at 16.10. Or it could be trying to bottom until sometime next week.

Market Edge - Second Opinion: Not a short candidate. If you are long, keep. But do not add any new positions.

[mrmarket]

I know money is money, but in this case, you are shorting a company buiding vehicles that are saving the lives of our troops. There are plenty other good short canidates out there besides a young company who figured out how to defeat the IED.  Shame on 3 stocks on fire. Sure, it looks like a good short on the chart, but one major contract announced will blow you guys out of the water and I hope that happens!!

[AussieTrader]

And they will continue building those fine vehicles whether 3SoF or anyone else is short or long their stock.

Trading a companies stock has nothing whatsoever to do with how noble or otherwise their end product is.

if you take your argument to it's logical extreme FRPT are profiting from death and war, how un American can that be? If there were no war and death there would be no market for their product.