Napco Security Technologies (NSSC)

Napco Security Technologies (NSSC, $5.56) is one of the companies I met with at the MicroCap Conference two weeks ago. At a quick glance, Napco appears to be a typical manufacturer with no competitive advantage and low margins, but there may be more to the story. They manufacture security products such as alarms, door locks and surveillance systems that are sold through a distributor network with schools being the major end user. They occasionally get large one-off projects like the $1.7 million dollar sale to Pepperdine University as part of the school’s larger security overhaul. As school shootings have become more common, schools will continue to beef up security. Just in 2015 there have been 52 school shootings (though six were suicides) with three of these considered mass shootings (four or more people shot). This provides a decent tailwind for Napco’s products.
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