Is anyone in the StockCentral community following LoJack (LOJN)?  I am starting to study it.  While my analysis is far from complete, here are some aspects of the stock that I find intriguing:

1.  Company performance is heavily correlated with new auto sales and the stock price has been beaten down along with the rest of the auto sector.  It trades at a discount to book value and a 7.5 PE ratio based on trailing earnings.  I am looking at ways to buy into the auto sector with relatively low risk.  I've been intrigued by GM based on the market cap of 5% of revenue, but see risk on the liabilities side of the balance sheet (i.e. equity could be worthless).  LoJack may be a way to get an auto sector valuation with a lower risk than many of the alternatives.

2.  5-year average ROE on LOJN is 18.6% . HIstoric sales growth of 12.9% and historic earnings growth of 11.8%.  LoJack is a widely recognized brand name and, I believe, has strong customer goodwill associated with it.

3.  With debt-to-capitalization of 17.2%, it's not very highly leveraged, which lowers risk.

4.  Market cap of $112M means it is likely overlooked by most large investors.  Market cap is also less than revenue of $222M in 2007.

5.  There is some volatility to historic earnings, but I am growing more tolerant of some earnings volatility.  I was just reading The Warren Buffett Way (better late then never) and about Buffett being philosophically "85% Graham and 15% Fisher".  Fisher believed that volatility of earnings is OK as long as the average earnings growth over a period of years is attractive.  I think the argument makes sense  . . .  .the companies that can report steady consistent earnings growth are either in industries with low volatility, or (like GE under Welch) manage to artifically smooth earnings with one-time events.  Neither factor is critical to whether a company is a great company or not.

I welcome any comments, and may even test out the Stock Study upload feature in the beta for StockCentral Toolkit to share the Stock Study with the SC community.

Thanks, Robert