An audit memorandum prepared by Senator Claire McCaskill's staff puts the amount of money spent on reconstruction and redevelopment contracts in Afghanistan at $23 billion, with $1 billion of it waste. So, was $22 billion well spent?

The funds have been spent on a variety of projects, including the construction of roads and the development of power generation utilities to agriculture, urban development and water sanitation.

Like any stock market loser, when I read the news I'm always looking for any potential ideas that can come from the story's theme. When I read a BusinessWeek article about Homeland Security Secretary Michael Chertoff "promising more cargo screening" my mind immediately thought about the ramifications this move would have on the defense sector. I'm happy that the Homeland Security Secretary is starting to do something after his bold predictions of terrorist activist just a few weeks ago.

In my research I've found a company that should directly benefit from this spending on increased screening -- American Science & Engineering (NASDAQ: ASEI). Surprisingly, the stock didn't move on this news, which makes the situation even better as it seems the connection between American Science & Engineering (AS&E) and the Chertoff announcement flew over most people's heads. I think the reason for this is that AS&E wasn't in any way tied to the article, meaning the article doesn't mention the stock, or any other stock for that matter.

American Science & Engineering isn't a one-trick pony or a poorly developed company. In fact, the company boasts a strong product line, and an undervaluation when compared to its sector.

The company's product line is quite diversified between a wide variety of innovative and useful security technologies. AS&E's SmartCheck screening system basically creates an electronic chalk outline of the person being screened -- any potential weapons, for example, stick out from the body. The TSA has begun pilot testing this technology. The company's Gemini X-ray system is also very interesting. When compared to standard x-ray scanners, the product has been shown to more easily detect metal objects and fine details. Like the SmartCheck, it is easy to see the applicability of the Gemini in today's world. Lastly, and my reason for writing this story, AS&E has a product that provides excellent cargo and vehicle inspection -- the OmniView.

MAJOR PAPERS:

• Thanks to a downturn in sales, sportswear maker Liz Claiborne Inc (NYSE: LIZ) will seek to divest itself of 16 of its 36 apparel brands, equal to about $800 million of its $5 nillion in annual revenue, reported the Wall Street Journal (subscription required)
• The Financial Times (subscription required) reported that Dell Inc (NASDAQ: DELL) has listened to customer concerns and has moved to eliminate "trialware" from a range of small business laptops and desktops computers.

• British mining company Rio Tinto plc (NYSE: RTP) is believed to be preparing a $34 billion, or $90 per share, takeover bid for Canadian aluminum company Alcan Inc (NYSE: AL), reported the U.K. Times.
• According to the Economic Times, FedEx Corporation (NYSE: FDX) has failed in its attempt to buy out Indian logistics company SafeExpress.
• The Chicago Tribune reported that the U.S. faces an "increased risk" of a terror attack this summer, according to U.S. Homeland Security Secretary Michael Chertoff.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Cogent Inc. (NASDAQ: COGT) is a top speculative idea from Mark Mowrey, editor of the Prudent Speculator TechValue Report. He explains, "Cogent's identification technology emphasizes the uniqueness of the human fingerprint as the best method for identifying its owner.

"Other potentially more reliable technologies exist, such as retinal, facial, voice, and vascular identification, but none has proved as long-term successful in the field as fingerprint matching. Applications include the obvious, like law enforcement and access restriction, and the not so obvious, such as laptop security and fingerprint-based payment systems.

"Revenue peaked in 2005, the bulk coming from two primary customers: the U.S. Department of Homeland Security and the National Electoral Council of Venezuela. Work continues with both agencies, but orders have become less predictable.

Prior to the 2004 presidential elections, the Department of Homeland Security regularly issued warnings of imminent terrorist attacks. These warnings often correlated with low poll numbers; they probably scared people, and they certainly cost the government money due to additional police and other protection. But it was never clear to me how real these warnings were so I am not sure whether to be thankful for the benefits of government vigilance or jaded by it because of the false warnings.

Yesterday, the Department of Homeland Security warned of attacks this month on stock trading and bank web sites. Anonymous sources suggested that a group calling itself "ANHIAR al-Dollar" is calling for Denial of Service attacks "to avenge 'Muslim brothers in the crusaders' Guantanamo prison camp.'" But this warning came with a special warning label of its own -- "the threat was unconfirmed and seemed to pose no immediate danger."

The financial community has concluded that Homeland Security is crying wolf again -- with markets showing little or no reaction. Today's warning raises many questions:

• If the threat is not credible why scare people by promoting it?
• Why issue the warning without suggesting actions for citizens to take to protect themselves?
• If a group really was serious about taking down our financial systems, would they really advertise it online?
• Regardless of whether terrorists or hackers wanted to bring down our financial systems, how vulnerable are these systems?
• If such an attack did happen, what can bank and online trading account holders do to protect themselves?
• Do account holders have any insurance protection in the event of such an attack?

Rather than repeatedly crying wolf, it would be great if The Department of Homeland Security could warn and protect the public from real attacks.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College.

True the line for the average airport gourmet coffee kiosk isn't quite as long on the one for security, but how will Starbucks (SBUX) and other airport retailers cope with the in-flight liquids ban? Starbucks partner HMS Host Corp, which places the kiosks in some 150 airports insists it is unconcerned. Duty-free shops also find themselves in the predicament.

It's much too soon to assess whether the ban will have any impact on at-airport revenue. Longer waits and recommendations that passengers arrive earlier and earlier for for flights might result in even more beverage demand at airports. As travelers become more and more used to terror alerts, as well as accepting of whatever carry-on restrictions are imposed, these changes will have less of an effect on the economy.

Michael Canfield is a private investor, a business and media writer, living in Seattle. He doesn't own stock in Starbucks.

[Photo courtesy Terry Johnston]