Strattec Security Corporation
Thesis
Strattec is expected to benefit from the growing market potential of re-codeable locks, with conservative estimates projecting $190 million in sales by 2009. With a normalized EBIT margin of 9%, the company could generate a NOPAT of $11 million and accumulate significant cash reserves, leading to a target stock price of $58, representing a 40% upside from the current price of $41.
Did it work?
The stock is up 83% since the pitch (from ~$41 to ~$75), so the long direction was correct and the $58 target price was eventually exceeded. However, that gain came over roughly 19.5 years — only ~3% annualized — whereas the thesis implied 40% upside within a few years, driven by re-codeable lock sales ramping to $190M by 2009. The target was reached on a timeline far beyond the thesis's stated horizon, and the specific 2009 sales/margin catalysts cannot be confirmed as having played out on schedule, so the thesis only partially validated.