By now you've heard the news: Al-Qaeda attempted to hijack Western economies' enviably efficient international supply chain to deliver bombs. On Friday, explosives were discovered en route by UPS (NYSE: UPS) delivery from Yemen to Chicago-area synagogues.
So far, the plot looks like just another flubbed al-Qaeda mission. Nothing went "boom" in the end. No one got hurt. But two things are certain to come of this for investors: First, UPS will incur costs from these latest terrorist shenanigans. As of Friday, ABC News was scaring up a storm of worry over the possibility of "more than a dozen potential bombs" being carted around the U.S. Northeast on UPS trucks. Even if the rumor is nothing but bunk, UPS will have to do a double-search just to make sure there's nothing to the story.
Second, on the flip side, a lot of stocks could benefit from this latest scare. General Electric (NYSE: GE), for example, just left the security business. But its brilliant purchase of InVision way back when will now help the company to which GE sold its GE Security Business: United Technologies (NYSE: UTX).
Other likely beneficiaries include anybody and everybody in the business of X-raying packages, parcels, and people of all shapes and sizes. These include Backscatter X-ray technician American Science & Engineering (Nasdaq: ASEI), ProVision millimeter wave scanner L-3 Communications (NYSE: LLL), and Rapiscan reader OSI Systems (Nasdaq: OSIS)
Incidentally, all four of these companies -- everyone from AS&E to UTC – saw their shares open strong today, the first trading day after the Yemeni news broke. Along with the general market, they're all slipping later in the day, so it looks like investors haven't gotten too irrationally excited about the long-term gains these companies could see from increased security.
However, in the end, stricter security means higher costs of doing business for both UPS and FedEx. Both will likely tighten security over parcels in their care, to make sure that what didn't "get there overnight" on Friday never does.
