Founded 37 years ago, SAIC has actually been making profits every year. Then again, it has a customer base that includes 500 U.S. federal, state, and local agencies. Basically, the company helps these agencies solve major technical challenges in such fields as national security, intelligence, and homeland defense. It counts roughly 9,000 active contracts and a backlog of $16 billion.
For example, in terms of national security, SAIC has partnered with Boeing
Next, the company has a variety of contracts to build intelligence systems, although many of them are classified. One that is not top-secret is the development of sophisticated mapping technologies that will improve the effectiveness of unmanned vehicles, such as the Predator and Dragon Eye.
As for homeland security, SAIC helps design systems for emergency response, vulnerability analysis, and infrastructure protection. This includes protection from things like "dirty bombs," chemical agents, and even improvised nuclear devices.
True, SAIC has tough competitors such as General Dynamics
In addition, SAIC has plenty of experience with buying companies. During the past ten years, it has purchased 60 firms for an aggregate value of $1.7 billion. In other words, it understands how to integrate companies with skilled personnel and deal with the complex issues of cultural differences.
Most importantly, SAIC has strong fundamentals. For the year ended Jan. 31, 2005, the business generated revenues of $4 billion, which was an increase from $3.7 billion. Net income was $927 million.
And the growth should continue. After all, SAIC plays in the fertile areas of federal spending: the war on terror, defense transformation (to make the military more effective), intelligence, and homeland defense. Thus, if an investor wants to play these trends, SAIC is a great place to start.
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Accenture is a Motley Fool Inside Value recommendation.
Fool contributor Tom Taulli does not own shares mentioned in this article.