Wednesday, June 13, 2012

Napco Security Solutions ( Nasdaq - NSSC ) -- Solid Finish to the Year Likely

Napco security Solutions (NSSC $3.00) appears on track to produce solid Q4 (June) results.  The company is a leading provider of home and commercial security systems.  It sells its products to a wide range of local installation companies, including the majors.  Growth has been stymied by the economic downturn.  But Napco has been investing heavily in product development, updating its systems with more intelligent computerized controls, Internet connectivity, and wireless communication.  At this point Napco is promoting that next generation technology to its existing distribution network.  Volume is picking up but it remains a small part of the overall business. 

Most of the national cable and phone companies are exploring home security as an additional option for its triple play customer base.  Those efforts remain in the trial phase.  But substantial growth could result if those distribution channels develop.  Our estimates remain muted for the moment due to the economy and the uncertainty associated with the next generation line.  Once that technology builds momentum substantial stock price gains could develop.  In 2-3 years income could reach $1.00 a share.  Applying a P/E multiple of 15x suggests a target price of $15 a share, potential appreciation of 400% from the current quote.

( Click on Table to Enlarge )

1 comment:

  1. Each of these excess stock buyers has different objectives and motivations.