<div id="readability-page-1">Stock market investment data and analysis finance graph. Business financial chart with moving up arrow graph getty My Long Idea this week features a rather unknown stock in an overlooked corner of the technology sector, where I see strong growth, market share expansion, long-term demand and major profit potential – all while making the world safer.  And, let’s face it. We need a safer world more than ever these days…  In any market, it’s very difficult to find good companies making money by making the world safer. In the current market, finding any good companies that are also good stocks is nearly impossible.  That’s why I built the first-ever AI agent for Investing – that investors can trust – because I trained it exclusively on proven-superior fundamental data and a proven alpha-generating ontology. My firm’s Robo-Analyst technology allows me to uncover compelling investment opportunities in any kind of market.  This week’s Long Idea is an excellent example.  Seemingly everything we own can be connected to the internet. You can stream movies on your refrigerator (though that sounds uncomfortable to watch), check the weather on your thermostat, and use countless other everyday items (smart toasters anyone?) that come with built-in connectivity.  The auto industry is no different, and telematics is at the heart of this connectivity trend. From vehicle tracking and stolen vehicle recovery to operational optimization, telematics is emerging as a cornerstone of the connected vehicle revolution.  MORE FOR YOU The market is overlooking the potential profits in this fast-growing corner of the technology industry that’s making the world safer and protecting assets. Furthermore, I love to see companies create value for all stakeholders. I believe companies focused on creating value for all stakeholders will create the most value for shareholders.  This week’s Long Idea is one of the telematics industry’s leaders that continues to expand and grow profits, while its stock remains undervalued. Ituran Location and Control (ITRN) is this week’s Long Idea.  Research and Markets forecasts the automotive telematics market will grow 15% compounded annually between 2024 and 2032. Rising demand for connected vehicles and the broader shift toward digital mobility are the primary drivers of this growth. In McKinsey’s 2023 Global Automotive Connectivity Executive Survey, 55% of auto executives ranked connected cars among the top two trends shaping the future of mobility, second only to electrification.  I think these sources of demand will remain in place and drive growth for many years to come:  Technological progress is also wind in the sails of the telematics market as advances in the internet of things (IoT), AI, and cloud computing increase use cases beyond basic GPS and into predictive maintenance, usage-based insurance, fleet optimization, and real-time safety features.  The telematics market, in particular, is ripe to expand into more of the total amount of cars on the road. In 2024, there were 287 million global embedded telematics subscriptions, while there are ~1.6 billion cars on the road.  In other words, only 17% of cars on the road have some kind of telematics system, which leaves a large untapped market. Given the large market opportunity, Berg Insight forecasts the number of embedded telematics subscriptions will grow 13% compounded annually from 2024-2029.  When I look at just new cars, rather than all cars on the road, I see greater adoption but still expect more in the future. In 2024, 79% of new cars had an embedded telematics unit, which is expected to rise to 93% in 2029.  Figure 1: Telematics Market Growth Forecast: 2024 – 2032  Telematics Market Forecast 2024-2032 Research and Markets Ituran’s telematics products and services are often installed before or immediately after an auto sale. As a result, the business grows when new vehicle sales rise. Good news for potential investors: S&amp;P Mobility forecasts global light vehicle production from 2024-2032 will rise:  Ituran is well-positioned to capitalize on the growth in these markets given its #1 market share in both Brazil and Israel, as well as strong presences in South America and Asia.  Stolen vehicle recovery (SVR) operations accounted for 70% of revenue in 2024, as Ituran operates in regions with relatively high vehicle theft rates.  In these regions, consumers drive demand, along with other stakeholders in an auto purchase, such as financing and insurance companies.  Consumers want to ensure their vehicle is safe and can be recovered in the event of a theft. Auto lenders want to ensure loan collateral is not lost, while insurance providers want to reduce the likelihood of a claim for lost property.  Accordingly, Ituran holds strategic partnerships with lenders and insurers alike. In Israel (52% of revenue in 2024), insurance companies encourage and, in some cases, require customers to subscribe to SVR services for mid-to-high end vehicles. Additionally, they provide insurance premium discounts to customers that subscribe to an SVR service. In Brazil (25% of revenue in 2024), insurance companies directly lease telematics products and require their customers to subscribe to Ituran’s SVR services.  With demand driven by both consumers and other stakeholders, Ituran has steadily grown its subscriptions base 11% compounded annually since 2015, from 948,000 in 2015 to 2.5 million at the end of 2Q25.  Importantly, these subscribers are quite sticky as well. Ituran notes in its 20-F that “assuming no additional growth in our subscriber base and based on our historical average churn rates of 3% per month in this segment, we can anticipate that at least 90% of our subscription fees generated in a prior quarter will recur in the following quarter.”  Figure 2: Ituran’s Total Number of Subscribers: 2015 – TTM ended 2Q25  ITRN Subscriber Growth 2015-2Q25 New Constructs, LLC Through its telematics products segment, Ituran installs its hardware at the time of vehicle purchase or during the original manufacturing and generates recurring revenue in its telematics services segment through subscription services that leverage the installed hardware.  This model provides a predictable stream of recurring revenue, as hardware sales drive subscriber growth, which in turn fuels the expansion of recurring subscription revenue.  Ituran has grown both its telematics services and products revenue by 7% compounded annually since 2015. See Figure 3.  Figure 3: Ituran’s Telematics Services and Products Revenue: 2015 – TTM ended 2Q25  ITRN Segment Revenues 2015-TTM New Constructs, LLC Ituran is the largest OEM telematics provider in Latin America and Israel.  Beyond its core markets, Ituran also operates in the United States, Argentina, Colombia, Mexico, Ecuador, and several other Latin American countries.  The telematics market is highly fragmented, with many region-specific competitors. At the end of 2Q25, Ituran has more than 2.5 million subscribers, which is comparable to most other competitors. For instance:  The fragmented nature of the market is largely due to the expertise required to build out successful SVR operations. Ituran not only sells hardware and subscriptions but operates its own dedicated recovery teams as part of its vehicle tracking and recovery. These teams have developed important market-specific knowledge about:  This knowledge enables quicker and more efficient SVR services. It is also difficult to replicate without years of operational experience.  I think market share leaders will continue to accumulate knowledge and best-practices that drive superior SVR and more market share gains. Figure 4 shows the number of vehicles (and market share for the taking) on the road by region as of January 2025.  Figure 4: Vehicles on the Road by Region as of January 2025  ITRN Cars on Road By Region New Constructs, LLC and Hedges Company As the company maintains leading share in its existing markets, it is strategically leveraging its expertise in each region to expand into adjacent, but higher-growth markets. First up, the company is expanding into the Latin America motorcycle market, specifically in Brazil, which is the largest market within Latin America.  Latin American motorcycle sales are forecasted to grow 13% compounded annually between 2025 and 2033, while the passenger car sales are forecasted to grow 5% compounded annually between 2025 and 2030.  In June 2025, the company reached a new deal with BMW Motorrad Brasil (BMW’s motorcycle business in Brazil), a leader in premium motorcycle sales in Brazil. Through the deal, Ituran will offer rider safety, security, and connectivity services to BMW’s customers.  On the company’s 2Q25 earnings call, management noted (emphasis added): “based on the relationship, the negotiation and the discussions, we are quite confident that we are talking about tens of thousands of new subscribers every year in the coming years.”  In August 2025, Ituran reached a similar deal with Yamaha. Management emphasized the importance of this opportunity by saying “This is more than a product deployment; it’s the start of a much larger market opportunity.”  These two partnerships significantly expand Ituran’s total addressable market, with the addition of a large base of motorcycle customers. The company plans to scale into other high-growth two-wheeler markets through partnerships with local OEMs as well as sales to the aftermarket.  Most notably, in March 2025, Ituran reached a new service deal with Stellantis in South America. As an initial part of the agreement, Stellantis switched their SVR subscriber base to Ituran. The contract covers multiple countries in the region and is set for a multi-year period, with the potential for expansion into additional markets and extended service periods.  Stellantis, the largest car manufacturer in Latin America and parent company of Fiat, Jeep, Peugeot, Opel, and others, provides a strong platform for growth. Management expects this partnership to significantly expand Ituran’s subscriber base over the coming years.  The Stellantis deal builds on top of the deal that was made with Nissan in the Chilean market in November 2024. Ituran leveraged its existing long-term partnership with Nissan in Mexico and signed a 5-year contract with Nissan Chile, in which Nissan’s customers will enjoy a one-year free trial of Ituran’s service, which Nissan pays for. The telematics unit will be pre-installed in the agreed upon models before reaching the dealers.  Lastly, Ituran is in the early stages of entering the Indian market with a joint venture deal with Lumax. The JV successfully completed a validation trial with Daimler India Commercial Vehicles (DICV) in December 2024. The JV provides Ituran the opportunity to expand into the most populous region in the world.  Ituran has grown both revenue and net operating profit after-tax (NOPAT) by 6% compounded annually since 2014. See Figure 5. Additionally, the company has grown its Core Earnings 12% and 6% compounded annually in the last 5 and 10 years, respectively.  The company’s NOPAT margin improved from 12% in 2019 to 17% in the TTM, while invested capital turns rose from 1.1 to 1.3 over the same time. Rising NOPAT margins and invested capital turns drive the company’s return on invested capital (ROIC) from 13% in 2019 to 23% in the TTM.  Figure 5: Ituran’s Revenue and NOPAT Since 2014  ITRN NOPAT and Revenue 2014-TTM New Constructs, LLC In such a competitive market, profit margins provide a key competitive advantage.  Companies that can maintain superior profitability have greater flexibility to compete on price and invest in growth, simultaneously. This ability positions them to pull ahead of rivals in the race for market share.  Ituran has the second highest NOPAT margin (operational efficiency) and the highest invested capital turns (capital efficiency). Together, these drivers propel Ituran’s ROIC to rank highest among publicly-traded peers, which include Trimble (TRMB), Verizon (VZ), Vodafone Group (VOD), and Samsara (IOT). See Figure 6.  Figure 6: Ituran’s Profitability Vs. Peers: Trailing Twelve Months (TTM)  ITRN Profitability vs Peers New Constructs, LLC Ituran increased its quarterly dividend from $0.14/share in 2Q21 to $0.50/share in 2Q25. The company paid over $93 million (13% of market cap) in cumulative dividends since 2021. The company’s current dividend, when annualized, provides a 5.5% yield.  Ituran also returned capital to shareholders through share repurchases from 2021 through 2023. During that time, the company repurchased a total of $22 million of shares. Though the company was still authorized to repurchase ~$7 million shares at the time, it has not completed any repurchases since 2023.  Since 2019, Ituran has generated a cumulative $273 million in free cash flow (FCF), which equals 44% of its enterprise value. See Figure 7.  Ituran’s $165 million in FCF since 2021 is more than enough to cover its $116 million in combined dividend payments ($93 million) and share repurchases ($22 million).  Figure 7: Ituran’s Cumulative Free Cash Flow  ITRN Free Cash Flow 2019-1H25 New Constructs, LLC Ituran earns a Very Attractive overall Credit Rating, and it scores a Very Attractive rating in each of the five credit rating metrics. See Figure 8.  Of note, Ituran achieved the growth in revenue and profits noted above while reducing its debt. Ituran’s total debt fell from $87 million in 2018 to $8 million in the TTM while its cash and equivalents increased from $53 million to $89 million over the same time.  Even if economic conditions deteriorate, the company’s strong financial footing secures its operations for the foreseeable future.  Figure 8: Ituran’s Credit Rating Details  New Constructs, LLC Fast growing industries that are highly fragmented are no stranger to acquisitions. The telematics industry has and is undergoing a consolidation of sorts already.  Ituran is an appealing acquisition target, given its growing subscriber base, leading market share, and superior profitability.  As an example of a potential acquirer, Samsara, a competitor mentioned earlier in the report, is not a pure-play telematics company. It operates a broader connected cloud platform that collects data from a wide range of sources, such as monitoring temperature in industrial machinery, tracking freight delivery trucks to optimize space usage, and providing AI-enabled video solutions, among others.  Since vehicle recovery and tracking is not one Samsara’s current strengths, I could see how adding Ituran into its larger connected cloud platform is synergistic. With Samsara’s ROIC of -9%, the company could benefit from owning a business as profitable as Ituran.  One risk for Ituran is its heavy reliance on revenue from Israel and Brazil. While the company currently holds the leading market share in both regions and there are no immediate signs of share erosion, any loss of share in these core markets could materially impact revenue. Furthermore, any geopolitical issues in these regions could have material impact on the company’s business. For instance, in 2Q25, product sales were impacted “due to a cessation of news sales during the 12-day war between Israel and Iran.”  While this geographic concentration is largely by design (going where the most cars are stolen), it is worth noting.  To mitigate some of this risk, Ituran is actively pursuing expansion into new markets, as discussed earlier. Successful execution of these initiatives would help mitigate its geographic concentration risk over time.  For Ituran, as with all telematics companies, growth depends heavily on strong relationships with OEMs and insurance providers. Given the highly competitive nature of the industry, securing and maintaining these partnerships is critical.  Failure to renew existing agreements or establish new ones would significantly limit a telematics company’s growth opportunities. Ituran is in a strong competitive position to win new business, with proven technology, leading profitability (more pricing power), and long-term relationships.  However, even if Ituran’s growth were to slow, it’s already more than priced into its current stock price, as I’ll show below.  At its current price of $35/share, ITRN has a price-to-economic book value (PEBV) ratio of 0.8, which means the market expects the company’s profits to permanently fall 20% from current levels. This expectation seems overly pessimistic considering Ituran has grown NOPAT by 11% and 6% compounded annually over the last five and ten years, respectively.  Below, I use my reverse discounted cash flow (DCF) model to analyze expectations for different stock valuation scenarios for ITRN.  In the first scenario, I quantify the expectations baked in the current price. If I assume:  ITRN would be worth $35/share today – equal to the current stock price. In this scenario, Ituran’s NOPAT would fall 1% compounded annually from 2025 through 2034. For reference, ITRN has grown NOPAT by 11% and 6% compounded annually over the past five and ten years, respectively.  ITRN would be worth at least $49/share today – a 40% upside to the current price. In this scenario, ITRN’s NOPAT would grow just 2% compounded annually from 2025 through 2034.  Should Ituran grow profits near historical rates, the stock has even more upside. Figure 9 compares ITRN’s historical NOPAT to the NOPAT implied in each of the above DCF scenarios.  Figure 9: Ituran’s Historical and Implied NOPAT: DCF Valuation Scenarios  ITRN DCF Implied NOPAT Scenarios New Constructs, LLC Here’s a summary of why I think the moat around Ituran’s business will enable it to continue to generate higher NOPAT than the current market valuation implies:  These days, fewer investors focus on finding quality capital allocators with shareholder-aligned corporate governance. Due to the proliferation of noise traders, the focus is on short-term technical trading trends while more reliable fundamental research is overlooked. Here’s a quick summary of what noise traders are missing:  Ituran has beaten earnings estimates in 8 of the past 10 quarters. Ituran missed earnings estimates this past quarter and has performed in line with Nasdaq (QQQ) so far this year. Year-to-date, both ITRN and QQQ are up 15% Should Ituran beat earnings again it could send shares even higher.  Additionally, any additional deals with OEMs and insurance providers could open up additional profit growth opportunities and send shares moving upward.  Ituran’s executives receive target-based cash incentives and excess return cash incentives. The former are based on “profit before tax” goals while the latter are based on the company’s stock performance relative to the Russell 2000.  I would prefer the company tie executive compensation to ROIC. Doing so ensures that executives’ interests are more aligned with shareholders’ interests as there is a strong correlation between improving ROIC and increasing shareholder value. Improving ROIC requires attention to all areas of the business, so including it in an executive compensation plan would incentivize executives to improve the entire business, not just one sales goal or earnings number.  Despite using profit before tax and stock return metrics, Ituran’s management has grown economic earnings, the true cash flows of the business, 3% compounded annually over the last decade, from $29 million in 2014 to $41 million over the TTM.  As a foreign filer, there is no insider sales data available for ITRN.  There are currently 100 thousand shares sold short, which equates to &lt;1% of shares outstanding and just under one day to cover.  The following fund receives an Attractive-or-better rating and allocate significantly to ITRN:</div>

ITRN

<p>这篇文章强调了 Ituran Location and Control（ITRN）作为一个在远程信息处理领域的有前景的投资机会，该领域预计将因对联网车辆需求的上升而显著增长。远程信息处理市场预计将在 2024 年至 2032 年间以 15% 的年复合增长率扩张。Ituran 在巴西和以色列拥有强大的市场存在，能够很好地从这一增长中受益，特别是在被盗车辆恢复服务方面，目前这项服务占其收入的 70%。该公司以其创新的方法和与贷款机构及保险公司的战略合作伙伴关系而闻名</p>

通过 Ituran 从一个鲜为人知的技术趋势中获取利润