Investment Review №332. The Bulls switched to big tech

Ituran Location and Control Ltd. (ITRN) is an Israel-based company specializing in vehicle monitoring, tracking, and stolen vehicle recovery services. Its SaaS model and low customer churn contribute to stable revenues and moderate growth. Notably, the company continues to expand its partnerships with automotive brands. Ituran recently expanded its partnerships with Yamaha and BMW in Brazil’s motorcycle market. This marks a significant milestone, as the two-wheeler segment in Latin America is gaining momentum and remains highly exposed to theft risk—an issue that ITRN’s solutions are well-positioned to address. In the medium term, this may exert pressure on ARPU, but we believe the company’s prudent pricing strategy positions it well to respond to macroeconomic and market dynamics. Ituran shares appear particularly attractive from a dividend perspective amid monetary policy normalization, with a forward 12-month yield exceeding 5.2%. According to analysts at Freedom Broker, the fair value target over a one-year horizon is $44.

Gaia, Inc. (GAIA) is a niche streaming service focused on self-development content, supported by strong consensus revenue growth expectations. The company operates a global video streaming platform and online community, enabling it to serve a relatively underpenetrated segment of the market. Gaia benefits from steady demand for subscription-based content and broader trends shifting away from traditional television toward digital platforms. Its extensive library of original programming, efficient content production strategy, and solid balance sheet provide a strong foundation for long-term growth. In 2025, the company has shown strong subscriber growth and introduced new offerings, including the launch of travel sales through its new marketplace. Looking ahead to 2026, Gaia is focusing on expanding its video content, strengthening direct marketing channels, and rolling out an AI assistant (AI Guide) to help retain users amid a new round of price increases and rising competition. The stock’s one-year price target, according to Freedom Broker, has been set at $7.00.

Espey Manufacturing & Electronics Corp. (ESP) is a key partner to leading defense prime contractors. The company specializes in power conversion devices and magnetic components, where reliability is of paramount importance. One of the key growth drivers for Espey is the increase in defense budgets and large-scale military modernization programs, which are fueling demand for ESP’s reliable power conversion and advanced magnetic systems. Additionally, future sales are supported by a record order backlog of $139.7 million—up 44% year-over-year. This substantial backlog of confirmed contracts provides strong revenue visibility: for fiscal year 2026 alone, the company plans to fulfill orders worth $49.1 million. From a fundamental standpoint, ESP’s debt-free balance sheet enables a generous capital return policy. Regular dividends for fiscal 2025 were raised to $1.00 per share, up from $0.68 in 2024. Freedom Broker analysts currently value the stock at $44 over a 12-month horizon.

REV Group (REVG) is a U.S.-based designer and manufacturer of specialty vehicles serving critical public service and commercial infrastructure sectors. The company is currently shifting its focus toward higher-margin segments of specialty vehicles, adjusting its product mix in favor of more complex, fully equipped fire trucks and ambulances. Meanwhile, the REV Drive initiative is enhancing operational efficiency and reducing costs—both of which are positive contributors to margin expansion. The recent exit from the bus and recreational vehicle businesses has further streamlined REV Group’s portfolio around faster-growing and more profitable core markets. The Specialty Vehicles division holds an order backlog of approximately $4.3 billion, driven primarily by fire and emergency medical service (EMS) segments. This provides REVG with 2–3 years of production coverage and ensures strong revenue visibility. Freedom Broker’s analysts project a fair value of $67 for the stock over the coming year.