A reader emailed me about a name on one of my long lost watch lists, that frankly I lost track of over time - Axsys Technologies (AXYS). Despite my doom and gloom on the economy the world is not ending; it will just be different. And the stock market is not the economy for long stretches of time (note all time high in stock market October 2007) One of the two areas I still think outperform are companies who have the unending pockets of the US government as their main customer - we have two names of this sort - Emergent BioSolutions (EBS) (all entries on this name here) and AeroVironment (AVAV) (all entries on this name here). In fact I just bought some of the former on it's pullback to the 20 day moving average (under $21) this morning - a stellar chart. Axsys is a defense "oriented" type of company and not all defense companies are doing great or have solid charts but this name seems to be in quite a sweet spot as the 2 year chart demonstrates.

Even in this horrid market, it's held its ground the past 6 months - flattish


From a technical perspective is has pulled back nicely today and yesterday afternoon from $72s to $62s (50 day moving average) so it's tempting to get involved today. I'd like to see what casino hour (3 PM) brings to the market first, and a purchase near the 200 day moving average would be even more appealing ($56s). But as we view the next 18 months or so we need to focus on businesses that are sheltered... that doesn't mean they will provide the most return - trust me at some point these commodity stocks will put on 80% moves in 2 weeks (but from what depressed level?) and housing stocks can double in a week in this environment on "hope". But those are trades at this point. We're looking under every last rock for a few things we can actually invest in (and trade around a core position) and hold without fear for more than 48 hours. This is the type of name we'd put into that category.

Axsys deals in 2 main product lines - imaging (70% of sales YTD) and surveillance (30% of sales YTD) - both produce lines growing in the 40% year over year range. Website here. Product overview here. Customer list here: Army, Navy, Air Force, Coast Guard, Border Patrol, Homeland Security (never a cutback in these areas) - along with many private defense oriented companies.

For over 40 years, Axsys has been designing and delivering accurate and reliable optical and motion control solutions to the US government and to high performance commercial markets. Axsys engineers are applying this experience to create increasingly sophisticated, vertically integrated systems that combine optics and motion.