Consumer Automotive Finance Inc (CAFI)

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10:20 LOJN New High Profile: LoJack (21.75 -0.09)

LOJN, which is now up over 80% YTD, briefly hit another 52-week high this morning. Investors are still rewarding the co, which has had six straight qtrs of rising revs, for boosting its full-year guidance on the heels of a record Q2 earnings period. So is LOJN's rise overdone? We think this is one turnaround story that has further legs. Other than having capabilities that track down your vehicle's location, there are also monetary benefits to use LOJN: many state insurers now offer up to 25% discounts for LOJN users, and LOJN offers incentives to auto dealers to market its stolen-vehicle recovery systems to car buyers. LOJN, which is now being used on motorcycles as well as cars, is expanding overseas, and domestically LOJN is only operable in 22 states and the District of Columbia, so there is still plenty of room for growth in the U.S. Currently, mgmt is seeking U.S. govt approval for nationwide coverage (presently LOJN has plans to expand coverage in Oregon, Ohio and South Carolina by year-end). Although the stock is extended here, LOJN currently trades at 27.7x 2005 consensus and only 22.8x 2006 EPS, and estimates for LOJN could be taken higher, especially if LOJN gets nationwide coverage approval (something that investors appear to be betting on happening).