Ituran Location and Control Ltd. (ITRN): A Bull Case Theory

We came across a bullish thesis on Ituran Location and Control Ltd. (ITRN) on Substack by Silba. In this article, we will summarize the bulls’ thesis on ITRN. Ituran Location and Control Ltd. (ITRN)'s share was trading at $37.82 as of May 16^th. ITRN’s trailing P/E was 14.01 according to Yahoo Finance.

In the mid-1990s, Tel Aviv’s rampant vehicle theft created a costly burden of insurance premiums and losses. Izzy and Eyal Sheratzky, leveraging their background in insurance investigations, acquired advanced but underutilized military-grade tracking technology and transformed it by pioneering a subscription-based leasing model. This shift from costly upfront hardware sales to affordable, recurring monthly fees established an early “Security-as-a-Service” business, turning a major theft issue into a predictable and scalable revenue stream. As their network expanded across Israeli cities, theft rates declined due to deterrence and network effects, while partnerships with insurance companies and banks reduced customer acquisition costs, accelerating growth.

Rebranded as Ituran, the company strategically focused on Latin America—particularly Brazil and Argentina—where high crime rates and a growing middle class drove urgent demand for vehicle security. Brazil alone accounted for about 25% of revenues by 2024. Ituran’s vertically integrated model, which includes manufacturing, installation, and physical vehicle recovery, set it apart from competitors offering primarily software solutions. Financially, Ituran’s 2.4 million subscribers generated $336 million in revenue with 7% growth in 2024, supported by strong subscription gross margins near 59% and EBITDA margins around 27%. The company’s balance sheet is healthy with over $77 million net cash and minimal debt, aided by a favorable cash conversion cycle that effectively uses “other people’s money” to fund operations. Ituran commands roughly 80% market share in Israel backed by government pricing and installer certification monopolies, while Brazil offers growth despite tighter margins. Challenges include costly hardware upgrades from the 2G shutdown and risks of partners internalizing services. Despite these, Ituran is evolving into a high-growth subscription business with accelerating subscriber gains, operating leverage, and a clear path to $100 million EBITDA, positioning it for a potential valuation rerating as the market recognizes its unique growth and resilient cash flow model.

Ituran Location and Control Ltd. (ITRN) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held ITRN at the end of the fourth quarter which was 12 in the previous quarter. While we acknowledge the risk and potential of ITRN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ITRN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.