By Laura Spadanuta, Assistant Editor
Reuters reports this week that although U.S. security spending is still rising, small and medium-sized homeland security stocks may have hit their peak.
Small and medium sized companies selling homeland security-related services have seen their stocks decline in the past year, writes Reuters reporter Bill Rigby this week. Rigby says those stocks have "generally peaked."
The downturn is attributed to general market conditions brought on by mortgage and debt market turmoil, as well as a change in the government's focus in Iraq and Afghanistan:
"...several companies have reported a slowdown in spending on federal contracts and delays on new ones, as the government's focus has shifted to programs with a direct effect on operations in Iraq and Afghanistan.
"War spending and the political climate in Washington have delayed funding on existing programs and new contracts," said SI International Chief Executive Brad Antle in late July."
While smaller firms' stocks drift south, larger defense companies are seeing their shares climb at unprecedented rates. The article provides examples of some major projects including Lockheed Martin Corp. providing New York's Metropolitan Transportation Authority with a $200 million electronic security system and Northrop Grumman Corp. 's $500 million contract to build a wireless network to connect New York's emergency services.
Rigby also points out that some security tech companies were never able to meet the growth rates that investors had hoped for.