The alleged terrorist plot in Britain sent shivers down the spines of air travelers, but it put some backbone in the stock of one local security company.


Investors are betting that the federal Transportation Security Administration may invest in systems that detect liquid explosives designed by OSI Systems Inc., which is testing its technology at Heathrow International Airport.


Since the terrorist plot was first reported in early August, shares of the Hawthorne company have risen about 10 percent to $19.27 a share after drifting down from a March high of $23.


Indeed, there has been plenty of chatter among analysts to try and determine which company may benefit from the new focus on liquid explosives. OSI is one of only two companies with equipment that detects liquid explosives and one of four companies that specialize in baggage and people scanners.


Though analysts agree that no company is likely to get a bump in sales anytime soon, in the long term the most likely beneficiary may be OSI, since its Rapiscan Systems Inc. subsidiary already has contracts with the TSA and the Defense Department. Rapiscan's Secure1000 product currently is being tested at the London airport.


The low-cost backscatter X-ray device is a body scanner that tests the presence of knives, plastic guns and liquid explosives and gels. Four of the devices have been deployed at Heathrow as a secondary screening device after traditional X-ray machines. More than 100 are being used by the Defense Department to screen suicide bombers at undisclosed locations around the world.


"They're basically waiting for a "go/no go" decision," said Joshua Jabs, an analyst at Roth Capital Partners, which makes a market in OSI's stock and has the highest price target, at $34 a share, among the six analysts that cover the company. "We expect a decision any day now."


Terrorist plot
OSI began working with the Defense Department in 1996 to create a liquid threat detection system after a terrorist plot was uncovered by authorities in the Philippines. At that time, the foiled plot aimed to destroy 11 airplanes flying over the Pacific Ocean. It was the first known terrorist plot in which liquid explosives were planned to be used to blow up an airplane.


Peter Kant, Rapiscan's vice president of government affairs, said OSI invented several baggage and air cargo screening products that use neutrons, or sub-atomic particles, to detect molecular compounds in liquid explosives and other hazardous materials. The systems simply flash a red light when such materials are found.

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