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U.S. News & World Report states that President Bush’s “top priority is transforming America’s military… into the world’s most high-tech, highly mobile fighting force.” With this issue of Taipan, you’re one of the FIRST to learn about a stock that my analysts say has incredible upside potential. (Some of them believe it could show an upside of 500% to 600% within the next twelve months.)

But even if they’ve got it all wrong and it only goes up by 100% in six months, it still would be a Taipan kind of stock. Why? Because the way Dell changed computers and Microsoft changed software, this company is revolutionizing modern warfare. Revenue has grown 39% a year from US$109 million in 1996 to US$715 million today. Still, the stock is enormously undervalued. Their huge growth is just starting. They have a patented, proprietary line of products. And they’re first in an industry that’s soaring in size.

At Taipan, we consider it our mission in life to help you make more money faster, with far less risk. Here’s the perfect example. This quietly booming enterprise has developed such sophisticated weapons systems, they seem like they’re straight out of a Hollywood movie. But these aren’t theories. They exist right now. Their weapons systems help combat terrorism, bring security back to our shores and enforce our policies abroad. The US military services have no choice but to change the way they fight the enemy. That’s why they’ve quickly become this company’s biggest customer.

The respected Center for Strategic and Budgetary Assessment recently stated “…the ability of the United States to field effective military forces depends critically on having access to a healthy defense technology base, one that’s capable of developing the right kinds of weapons systems…”

This company makes the right kind of weapons systems. They’re on the forefront of modern warfare. Their systems are precise, deadly and effective.

Still waters

Few people have heard of this company and the stock is vastly undervalued. Once it’s “discovered,” chances are it’s going up very quickly as others recognize its enormous potential. Right now, almost no brokerage houses cover it. It’s received very little press coverage. While everyone was running around talking about Global Crossing, MCI and Enron, this firm was busy developing next-decade warfare systems that are bringing in millions in profits. Not only is the US government a huge customer, companies and governments around the world are lining up. They have over 600 customers—and that’s not surprising. This is because public safety and national security have taken on a new meaning.

Look at the results. Sales grew from US$109 in 1996 to US$715 million in 2001. From January 1, 1996, to September 30, 2001, revenues increased at an annual compounded growth rate of 39%. Records continued to be set in 2002. Net income rose 67.5% and sales hit a new high. In 2002 alone, they won 19 industry awards for quality and innovation. This is extraordinary!

Cold War math

Gone are the days when the Mutually Assured Destruction theory worked. Known as MAD, it went like this: Russia knows where we are and we know where Russia is. If they launch a thermonuclear attack on us, we will launch one at them and we will both die. Knowing this, both sides gladly refrained from such insane attacks.

This worked for over 57 years. The Cold War cost us approximately US$8 trillion dollars, but it allowed an entire generation to grow up in peace, security and comfort. Our entire military strategy was based on this “I know where you live” idea. But that’s dead. Overnight, it became obsolete.

Terrorism changed the rules. We don’t know where they live because they’re all over the world. We’re not sure what kind of weapons they have or do not have. We know that they’re working on nuclear capabilities. And they blend in with the local population until they strike with deadly force and precision. September 11 sadly proved that point. This war will take decades to win. And our military is now considering terrifying scenarios that could make the nightly news tomorrow:

• The New York Stock Exchange comes tumbling down because of a three-ton bomb planted outside in the street.
  
• The Internet freezes up because billions of electronic “worms” are released by our enemies.
  
• A 20-kiloton atomic device is placed in New York City. This is the precise size weapon Iraq was working on. From Washington Square Park up to 60th Street—60 blocks—every single building is flattened, killing 3.2 million people outright and giving over 1 million others cancer from the radiation. This device literally has the power to destroy three square miles of buildings.
  
• A deadly virus is released in a Chicago subway at noon. By early evening, over 750,000 people have become infected with a disease that overwhelms the local medical facilities.

These are not unfortunate occurrences in far-off foreign lands that we see on the evening news. We now live with the fear of these things in our offices and living rooms. Whether it’s al-Qaeda or the late and unlamented Saddam Hussein, this threat is real and growing.

My point: we have to address this problem no matter what the cost or politics involved. We have no option. They have to be stopped. And one of the major players in this new era of warfare is this little-known company. That’s why it’s such an outstanding stock.

Timing is money

Timing is the essence of great investing. It’s when you got in that counts the most if you look at the great investments of the past. Sure, you could have bought Microsoft, Dell, Coke, and Cisco in the last few years with high expectations of profits. But it didn’t work out that way. Consider the timing:

If you bought Dell sometime in 2000, you’re down at least 53%. Yet if you had gotten in for a six-year stretch that ended right before the stock started declining, you would have seen it go from US$2.75 to US$48.50—making 16.6 times your money. If you bought Microsoft less than three years ago, you’ve seen 54% of your money vanish. But if you had gotten in just three years before then, you would have seen the stock go from US$21 to US$122, an increase of 480%. That’s exactly why we say timing is everything!

Their market capitalization is just US$793 million. If you want to see how high this stock could go, compare this figure to the biggest defense companies. Boeing Company: US$25 billion. General Dynamics: US$16.1 billion. Honeywell International: US$20.3 billion. Lockheed Martin: US$24.9 billion. Northrup Grumman: US$11 billion. To achieve a valuation that even approaches those of these larger enterprises, the stock would have to go up 24 times.

There’s another reason why it’s relatively unknown. The stock market, and investors in general, have historically been very slow to recognize the emergence of a new industry and the death of an old one. THAT’S why they miss getting into the great investments early.

This company is poised to capture an impressive share of this new military market, and could grow very rich along the way.

Let me turn you over to our Special Projects Editor, Beirne White, for details on this incredible story: