Profit from the Long Arm of the Law with Brekford
When most folks get traffic tickets, their initial reaction is not positive. If you’ve ever gotten a speeding ticket or a citation for “easing” through a red light, you know that the trouble does not end with that little piece of paper. There’s a plethora of financial hits to be absorbed including the fine for the actual ticket, court costs and perhaps higher insurance rates.
In other words, when most of us get traffic tickets, we think about the money we’re about to lose, not profiting from the scenario. NOW there is a way to profit from the millions of traffic tickets issued annually and Brekford Corp. (OTCQB: BFDI) is the stock to do it with.
Look at these numbers:
| Driving Citation Statistics | ||
| Average number of people per day that receive a speeding ticket | 112,000 | |
| Total annual number of people who receive speeding tickets | 41,000,000 | |
| Total percentage of drivers that will get a speeding ticket this year | 20.6 % | |
| Average cost of a speeding ticket (including fees) | $152 | |
| Total paid in speeding tickets per year | $6,232,000,000 | |
| Average annual speeding ticket revenue per U.S. police officer | $300,000 | |
| Percent speeding tickets that get contested in traffic court | 5 % | |
| Total number of licensed drivers in America today | 196,000,000 | |
| U.S. Highway Patrol: Verified 5.24.2013 | ||
| http://www.statisticbrain.com/driving-citation-statistics/ | ||
Maryland-based Brekford is a provider of automatic traffic safety enforcement-photo speed and red light enforcement systems. Their Slick-Ticket, an electronic ticketing system for public safety vehicles allows law enforcement officers to quickly access driver’s license and registration information, as well as issue tickets, warnings and citations.
In a few words, Brekford is engaged in a prosaic, dependable business that has the potential to be far more lucrative than many investors may initially understand. Think about it this way: With scores of states, cities and towns strapped for cash, a known way to boost revenue is through increased traffic violation monitoring.
Unique pure-play stock
That puts Brekford in a noticeable sweet spot as the only publicly traded company in the U.S. that can be considered a pure play on automatic traffic enforcement. Brekford’s one-stop-shop offerings have made the company appealing with an array of publicly funded enterprises. In the company’s own words:
“Brekford has been providing services to the U.S. military, various federal entities and numerous security and public safety agencies throughout the United States with an end-to-end suite of mobile computer and video technology, vehicle upfitting services, and automated traffic safety enforcement solutions for over a decade.”
That does not tell Brekford’s growth stock story, but the Company’s balance sheet does. At the end of the first quarter, Brekford had almost $9.6 million in total assets and cash compared with just $7 million in liabilities. A ratio like that is not often found in the world of micro-caps. In the first quarter, revenue rose almost 6% while gross profit surged nearly 18%.
That’s right: Microcap Brekford is profitable; one thing that’s hard to find with many smaller companies.
The Wall Street community is starting to take notice, but not to the point where Brekford’s hidden gem status is threatened. Analyst coverage of the stock currently is not overwhelming, but one research report we uncovered offers critical insight into Brekford and its stock potential.
“We expect the Company’s net income to increase at a 20% plus average annual rate as BFDI increases its share of the market for automated traffic safety solutions and improves its ability to assist state, county and municipal governments in managing scarce resources more cost-effectively in budget-constrained environments.
“At their recent price of $0.68, BFDI shares are trading at approximately 7.6X our estimate of earnings for the year 2013,” RJ Faulkner & Co. in a recently released research report.
Shares of Brekford have gained 15% year-to-date, a performance that is in line with the iShares Russell Microcap Index Fund (NYSE: IWC) which has surged 17%. Still, the stock is not overvalued.
Arguably, it is undervalued.
“We expect the Company’s profit margins to widen as it brings more automated speed and red light enforcement contracts on line, further enhancing the visibility of above-average earnings growth and attracting greater interest within the investment community.
“In our opinion, BFDI shares have the potential to increase approximately 120% in price over the next 9-12 months, and several hundred percent during the next 2-4 years.” According to the RJ Faulkner report.
Even if the stock “just” doubles in the next year, a mere $6200 investment for 10,000 Brekford shares today would jump to over $12,000.
That would sure cover a lot speeding tickets.
Buoyed by a recent contract from the city of Baltimore to manage the “Largest Combined Automated Speed and Red Light Enforcement Program in North America” and the potential to land more of those agreements going forward, indicates Brekford is not just a 9-12 month play.
We agree with R. Jerry Falkner, CFA who noted in his report:
“As the investment community becomes aware of Brekford’s potential to predictably increase its EPS at a 20%-plus average annual rate due to the recurring nature of ATEG and BFS contract revenues, we believe the price/earnings ratio accorded BFDI shares can eventually reach the equivalent of 1X the sustainable earnings growth rate, or 20X trailing earnings.
“With sales and earnings growth expected to accelerate in 2013, we believe a multiple of 17X projected 2013 earnings can be attained within the next 9-12 months.
“This suggests intermediate-term price appreciation potential of 120%, with the opportunity for BFDI shares to appreciate several hundred percent in price…”
Bottom Line Thinking: Drive safe, but you could enjoy a lot of Brekford gains from those who don’t if you add BFDI to your small-cap portfolio.
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Recent News
Brekford Announces Contract to Process Parking Citations and Manage Delinquent Collections for City of Asheville, North Carolina
Company’s Expansion into North Carolina is Consistent with Geographic Diversification Strategy
HANOVER, MD–(Marketwired – May 15, 2013) – Brekford Corp. (OTCQB: BFDI) (OTCBB: BFDI) (“Brekford”), a public safety technology and services solutions partner to public sector agencies at the local, state and federal level for over ten years, today announced that it has been awarded a contract with the City of Asheville, North Carolina for the provision of parking citation issuance, processing and delinquent collections.
The contract includes the provision of wireless handheld enforcement devices, web-based parking citation processing software, processing services, in-state and…
Click here to read the full release: http://finance.yahoo.com/news/brekford-announces-contract-process-parking-120000820.html
Brekford Announces First Quarter Operating Results
Company Solidifies Infrastructure to Enable Long-Term Support of Major Contracts
HANOVER, MD–(Marketwired – May 13, 2013) – Brekford Corp. (the “Company”) (OTCBB: BFDI) (OTCQB: BFDI), a leading public safety technology service provider of fully integrated traffic safety solutions, vehicle upfitting, and rugged mobile technology, today announced its operating results for the first quarter of 2013.
The Company generated net income of $75,599 for the quarter ended March 31, 2013, despite an extended transition period for the launch of Baltimore’s Automated Traffic Violation Enforcement System (“ATVES”). Revenue increased 5.9% to $4,394,839, primarily driven by…
Click here to read the full release: http://finance.yahoo.com/news/brekford-announces-first-quarter-operating-143805714.html
Brekford Announces Contract to Perform Delinquent Parking Citation Collections for City of Laurel, Maryland
Company’s Municipal Recovery Agency, LLC Subsidiary Targets $40 Billion Potential U.S. Market for Collection of Delinquent Municipal Receivables
HANOVER, MD–(Marketwired – Apr 3, 2013) – Brekford Corp. (OTCBB: BFDI) (OTCQB: BFDI) (“Brekford” or “the Company”), a leading provider of public safety technology and automated traffic enforcement solutions, vehicle upfitting, and rugged mobile technology, today announced that its wholly-owned subsidiary, Municipal Recovery Agency, LLC (“MRA”), has entered into a contract with the City of Laurel, Maryland for the provision of delinquent parking citation collection services.
“This represents an important contract for MRA, which was formed in 2012 to target the growing need among large and small municipalities for the more effective collection of delinquent receivables,” commented…
Click here to read the full release: http://finance.yahoo.com/news/brekford-announces-contract-perform-delinquent-161229559.html
Brekford Corp. Selected by City of Baltimore to Manage Largest Combined Automated Speed and Red Light Enforcement Program in North America
Company Expects Program to Generate over $135 Million in Gross Citations Revenue over Initial Five-Year Term of Contract, While Ensuring Safety of Pedestrians and Motorists
HANOVER, MD–(Marketwire – Nov 8, 2012) – Brekford Corp. (OTCBB: BFDI) (OTCQB: BFDI) (“Brekford” or “the Company”), a leading provider of public safety technology and automated traffic enforcement solutions, vehicle upfitting, and rugged mobile technology, today announced that it has been selected to manage the automated speed and red light enforcement program by the City of Baltimore, Maryland.
The Company was selected from among three finalists, including Xerox State and Local Solutions, Inc. and Redflex Holdings. The program has been managed for more than 10 years by Xerox State and Local Solutions, Inc.
Click here to read the full release: http://finance.yahoo.com/news/brekford-corp-selected-city-baltimore-164925361.html
For additional information, visit the Company’s website at: http://www.brekford.com
Here’s a link to 26 surprising facts you probably didn’t know about speeding tickets: http://www.joetaxpayer.com/26-surprising-facts-about-speeding-tickets/
Mike Casson
Executive Editor
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