Ituran Location & Control: Lost and eventually found

Nothing invokes that kicked-in-the-stomach feeling faster than that instant you realize you've lost something valuable—as anyone can attest who has strolled to the parking lot and found the family car is nowhere to be found.

Thanks to modern technology, the material losses needn't be a fait accompli. Companies like LoJack Corporation (Nasdaq: LOJN), a leading provider of wireless network systems to track and recover stolen vehicles, can help assuage the pain.

Though it's the most recognized name in lost-and-recovery, LoJack isn't the only name. Ituran Location & Control Ltd. (Nasdaq: ITRN), an Israeli firm that provides stolen vehicle recovery and tracking services (52% of revenue) and wireless communication products and services (48%), is another formidable assuager that has also mastered the art of recovering the lost and stolen.

Ituran lacks LoJack's recognition and presence in the United States, but it's a wide-open world. Take Israel: Ituran's home turf is also its largest market, accounting for 38% of its trailing 12-month revenue of $112 million. And there's a good reason Ituran makes money in the Holy Land:  Stolen vehicle recovery (SVR) services or automatic vehicle location (AVL) products are a prerequisite for many insurance providers to cover medium and high-end automobiles, while other providers offer premium discounts to encourage clients to use Ituran's services.

The same push-pull incentives are present in Ituran's second and fourth largest markets (the United States is the third) as well. In Brazil (25% of revenue) and Argentina (9%), insurance companies purchase or lease Ituran's AVL products directly and subsequently require customers to subscribe to SVR services.

Search and recovery is a dependable business. To keep revenue humming at an historical 17% annual pace, though, Ituran is leveraging the core enterprise to launch in-car global positioning systems (GPS) in markets where it already has a strong customer base. Acquisitions of ERM Electronic Systems Limited, a developer, manufacturer and marketer of vehicle security, tracking, and management global systems, and Mapa Group, a provider of geographic information in Israel, will not only help facilitate the move to GPS, but will (at a minimum) add $10 million annually to the top line. 

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