Secured Profits

	Elliott Gue PF Newsletter.com
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It's not just the government that's spending big on security; corporate outlays are also on the rise. Here's how to play the trend.

Most investors are aware that US and foreign governments have dramatically hiked spending on defense and security since 9/11. And the recent, tragic bombings in London have once again highlighted our vulnerability to such attacks; you can bet there'll be more homeland security spending in the pipeline.

But most pundits tend to focus exclusively on government spending, ignoring private corporations' response to terrorism.

A recent survey by the Conference Board addresses just that issue. The conclusion: Private companies are keenly aware of the threats that terrorism poses to their business and have responded by ramping up spending drastically since 9/11.

As you might expect, corporations are hiking spending to protect buildings, infrastructure and employees. But that's only part of the story.

Recent events have also served to highlight vulnerabilities in other areas--there's been a notable hike in spending on data and network security, employee background investigations and risk management.

A handful of companies stand to benefit from all that increased spending on corporate security. Here are a few of our favorites.

Securing the Premises

When it comes to the protection of buildings and facilities, no camera or alarm system can replace a staff of trained security guards. And ABM Industries (NYSE: ABM) is one of the largest employers of security officers in the US.

The company provides guards specifically trained to protect various types of facilities including office buildings, parking lots, industrial complexes and even residential communities.

In addition to guards, ABM also offers security consulting services to help companies identify and respond to potential threats and spot vulnerabilities. And ABM can also perform background checks on employees to look for past criminal records or violent behavior. ABM is a buy below 22.50.

Verint Systems (NSDQ: VRNT) sells intelligence software used to analyze security videos, telephone calls and e-mail traffic. The company sells to both government and corporate clients.

On the corporate side, the company's Networked Video Solutions product can analyze video surveillance tapes in real time to identify suspicious activity or specific threats. The software is capable of analyzing data from several cameras simultaneously, vastly improving the speed with which a company can respond to security breaches.

And Verint also makes software that's used by the government and large telecommunications companies to identify, record and analyze telephone conversations. The software can identify suspicious telephone conversations and record them for later replay. Verint is a buy up to 45.

Of course, one asset that most companies can't survive without is employees. Nearly 20 percent of all companies in the Conference Board survey reported that executive security was a top worry. That number was much higher for companies in a few critical industries such as energy—increasingly employees in these firms need to travel to unstable, dangerous parts of the world.

Armor Holdings (NYSE: AH) bulletproofs vehicles such as SUVs, sedans and limousines. Bulletproofing can involve simply protecting the vehicle against conventional gunfire or more complex shielding to protect against bombs and other explosive attacks.

The company's client list includes executives of major multinational corporations, wealthy individuals and even foreign heads of state. With more than $100 million in revenues from this business last year, Armor is a world leader in producing bulletproof vehicles.

In addition, Armor Holdings manufactures lightweight ceramic bulletproof vests and armored Humvees. Both of these products cater to primarily military clients. Buy Armor under 42.50.

Protecting IT

According to the Conference Board survey, the threat from computer hackers and viruses ranks even higher than that of a direct terror attack. More than 40 percent of survey respondents have increased their spending on information technology (IT) security since 2001.

Just as important as protecting corporate facilities is protecting corporate data. The market leader in protecting such information is the aptly-named Iron Mountain (NYSE: IRM).

Businesses accumulate thousands of pages worth of employee data, tax documents, bills and legal contracts over time and all that data must be securely stored lest it falls into the wrong hands. Iron Mountain moves these files to its secure warehouses and catalogs them.

Imagine the potential business impact of the loss of customer data due to a virus, hacker attack or a simple power surge. Iron Mountain also offers secure data back-up—companies can store a copy of their data on Iron's servers and retrieve that data quickly in an emergency situation. Buy Iron Mountain below 33.

Every year there are several high-profile and dangerous computer viruses circulating around the Internet. And every consumer knows the dangers of spyware that can imbed itself in your computer and steal personal data. Even some of the nation's largest companies have seen their networks compromised by these malicious codes.

Symantec (NSDQ: SYMC) is a provider of Internet- and network-security products. The company's best-known brand is its Norton line of antiviral software.

Symantec is a buy under 25.

Elliott Gue will be available to take your questions until Thursday, July 21. Please use the form below to submit your questions.