) more than doubled--from 3.95 on Sept. 18 to 9.28 on Dec. 7. The reason: The company makes tests to determine water quality and food safety, and last fall, concerns about bioterrorism were at their height. Strategic's tests detect the presence of chemicals, pesticides, and other compounds in water. But the stock swooned thereafter--as the company missed earnings estimates in 2001, when it earned just 6 cents a share on sales of $29.3 million, down from 9 cents on sales of $25.8 million in 2000. With the stock now down to 4.87, some pros have been buying.
A new wrinkle: Strategic is said to be poised to launch new products in the next few months: tests to detect the presence of E. coli and mad-cow disease. The mad-cow test is being financed mainly by McDonald's, which intends to require its beef suppliers to use it. This test could be in the market in the third quarter, says one source.
Arthur Koch, chief financial officer and chief operating officer, figures the market for the mad- cow tests could run to $20 million, and the one for E. coli to $40 million. Another forthcoming product: MicroTox, a test to detect chemicals at water-treatment plants. On June 12, President Bush signed the Bioterrorism Preparedness Act of 2001, which in part provides funds for states to assess the vulnerability of their water systems to chemical contamination. Koch puts the market for MicroTox at $10 million to $20 million. Mark Chekanow of Sidoti, a research firm serving institutional investors, rates the stock a hold, and expects earnings of 1 cents a share in 2002 and 22 cents in 2003. One fund manager, who owns shares, says the estimates "are too low." By Gene G. Marcial