Thirty-four years ago a man by the name of Bill Reagan came up with a patent for a vehicle tracking device to quickly located stolen vehicles. That patent turned into LoJack Corporation (Nasdaq:LOJN), which has gone on to recover more than $5 billion in LoJack-equipped assets. Despite this impressive contribution to vehicle recovery in the United States and other parts of the world, the company has always struggled to maintain positive momentum since going public in 1983. Today, its stock trades around the $3 mark, not too far from an all-time low. Blue chip investors need not apply. However, speculators and those with a propensity for risk ought to have a closer look. Here are three reasons why.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Net Current Asset Value

Ben Graham believed that investors would do well by investing in companies with a stock price of no more than 67% of its net current asset value per share (NCAVPS). Because this method employed the "cigar butt" theory of investing, it was essential that you diversify your portfolio. Today, it's very rare for a profitable business to be trading for less than NCAVPS. In the case of LoJack, its NCAVPS as of the end of March is 85 cents a share meaning its stock trades for 3.5 times NCAV. That's reasonable when compared with some of its peers. In addition, it has $2.67 in cash per share and net cash of $1.98 a share. Given its North American business is strengthening, it's going to take a major downturn to bring the company to its knees. Its financial situation is remarkably solid for a business seemingly at the end of its rope on several occasions.

LoJack and Peers


Share Price/NCAVPS



Voxx International (Nasdaq:VOXX)


iRobot (Nasdaq:IRBT)


STRATTEC Security (Nasdaq:STRT)


TiVo (Nasdaq:TIVO)


State of the Business

Looking at the first quarter revenues for the past eight years, one thing is abundantly clear - LoJack's had better days. At the height of its success in 2007, its revenues in the first quarter were $54.1 million, 58% higher than in 2012. On the bright side, CEO Randy Ortiz has only been in the top job since last November, yet business is already starting to improve. In the first quarter, its adjusted EBITDA was $1.4 million on revenue of $34.3 million compared to an adjusted EBITDA loss of $200,000 on revenues of $30.3 million. The North American segment saw revenues increase 21.3% to $27.1 million, the best result since 2008. For all of 2012, despite a decline in international sales, it expects revenues to grow between 3 and 7% year over year. Ortiz spent 28 years at Ford Motor Co. (NYSE:F) playing a big part in the revival of its North American operations. He's a sales guy; yet the first thing he did was bring in Donald Peck, a CFO with a great deal of experience. Both Ortiz and Peck will receive much of their compensation based on achieving two-year rolling EBITDA targets. Their success depends on the company's success, providing there's an alignment of interests. I like the idea of a car guy running the show; someone who'll be able to make things happen in the showrooms.

SEE: Analyzing Auto Stocks

Recovery Mode

People are starting to buy new cars again. In its first quarter conference call, Ortiz reminded listeners that the average age of vehicles on the road in the U.S. is around 11 years old, the highest it's been in his 30-year career in the automotive business. As consumers continue to replace their old vehicles, LoJack will be in a position to benefit from those sales. Dealers, due to a decrease in new car margins, will look to value added products to fatten the bottom line. LoJack must become closer with its dealer partners and the end consumer if it hopes to dig itself out of the mess it's facing. Ortiz emphasized the fact it must be easy to deal with if it wants to become a relevant part of dealerships again. The brand is strong; it just needs the dealers to buy in. If Ortiz can't convince them, nobody can.

The Bottom Line

We are either witnessing LoJack's last stand or the beginning of its rebirth. I believe it's the latter. Investors with an ability to hold for two or three years and a willingness to risk a few thousand dollars should do nicely. Just don't take the money from your kid's education fund. It's not a sure thing.

At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!