Ituran: A Car Thief's Worst Nightmare

|
Includes: ITRN, LOJN
by: Douglas Goldstein

When I used to live in the United States, there were great ads on the radio for LoJack (NASDAQ:LOJN). LoJack had this technology that allowed them to quickly find stolen cars. Then, when I moved to Israel, I met Ituran (NASDAQ:ITRN), LoJack’s international competitor.

Three hundred million dollar Israel-based Ituran, which trades on Nasdaq, sells high-tech tracking, and location systems through locations and partners in the U.S., South America, the Middle East, and the Far East. (Check out its cool video here to see the system in action.)

The Motley Fool community gave the stock a 5-star rating last week, considering it a real value play (they write about the stock right next to a discussion of Benjamin Graham’s, The Intelligent Investor). And Stockerblog flagged the company as one of the few Israeli dividend-payers, and, said it was worth looking into.

With James Bond-like tracking devices, this family-run business certainly deserves some attention. Be aware, though, that having a father and his sons run a business can sometimes create unknown conflicts of interest, and even though the company has been noted as paying a dividend, it’s small, and it could be cut anytime. However, though it is smaller than its main competitor LoJack (~$300 million vs. ~$420 million), it has almost the same net income ($19 million). It has a P/E of 15.50, versus LoJack’s P/E of 22.7.

The stock looks like a good play, but if you’re not a risk-taker, consider installing Ituran in your car. Using its vehicle tracking service is like buying a put option on your auto stock.

Ituran 1.5-Year Chart
Ituran 25 06 2007