STRATTEC Security (STRT) is not a story stock. It is not going to dominate headlines, and it is not going to ride an AI narrative higher. It makes unglamorous but essential automotive access control products, and it tends to trade like what it is: a small-cap supplier that most investors only notice when the chart wakes up.
That “ignored” status is exactly why it can be interesting here. At roughly $79.49, STRT is sitting just below its recent 52-week high of $86.47 (set on 01/16/2026), with valuation that still reads as conservative for a business producing meaningful free cash flow and carrying minimal leverage.
Thesis: STRT looks like hidden value in a corner of the auto supply chain that the market routinely misprices. If operational improvements and steady demand hold, the stock has a reasonable path to a retest of the highs, with defined downside if the market decides to punish cyclicals again.
This is a trade idea, not a forever hold. The goal is to capture a rerating move back toward recent highs and potentially through them, while being honest that small-cap autos can turn on a dime.
What STRT actually does (and why the market should care)
STRATTEC Security designs and manufactures automotive access control products. In plain English, it sits in the “you can’t ship a vehicle without it working” category: vehicle access solutions and security/authorization systems. The company also has user interface controls solutions, dealer direct fulfillment services, aftermarket solutions, and a product line referred to as bolt.
Why care? Because in the auto supply chain, the market often prices suppliers as if they are all the same: cyclical, margin-thin, and forever at the mercy of OEM build schedules. But suppliers that can convert revenue into consistent free cash flow and maintain a clean balance sheet can deserve a higher multiple than the market reflexively assigns.
STRATTEC is also not a micro operation. It has 2,848 employees and a footprint that suggests real production complexity, not a niche job shop. The market cap, though, is only about $333 million, which makes it easy for institutions to ignore and easy for valuation gaps to persist.
Fundamentals and what jumps out in the numbers
On valuation and balance sheet posture, STRT reads more like a disciplined cash generator than a stressed cyclical.
| Metric | Current Read | Why it matters |
|---|---|---|
| Market cap | $333.1M | Small enough to be overlooked, big enough to be real |
| P/E | ~14.17 | Not demanding if earnings hold up |
| P/B | ~1.44 | Not priced like a “must own” compounder |
| P/S | ~0.58 | Low revenue multiple for an operating business |
| Free cash flow | $65.06M | The part the market tends to underappreciate in small-caps |
| EV/Sales | ~0.43 | Cheap on enterprise value, not just equity value |
| EV/EBITDA | ~6.27 | Below what “quality industrial” names often command |
| Debt/Equity | ~0.02 | Very low leverage reduces blow-up risk in a downcycle |
| Current ratio / Quick ratio | ~2.49 / ~1.96 | Liquidity looks comfortable |
| ROA / ROE | ~6.03% / ~10.2% | Respectable returns for an auto supplier |
The headline for me is the $65.06M free cash flow figure against a $333M market cap. Even allowing for cyclicality, that is a big number relative to the equity value. On the multiple side, price to free cash flow of ~5.12 and price to cash flow of ~4.65 stand out. Those are not “everything is perfect” multiples.
There is also a qualitative fundamental driver worth emphasizing: management has been talking about operational transformation and automation. In the most recent earnings call coverage (company instrument page is the only direct link available here), STRATTEC discussed nearly 10% revenue growth and expanded margins, despite industry disruptions like a supplier fire and semiconductor shortages. I treat call commentary as “directional,” but it reinforces the idea that execution is improving rather than deteriorating.
Where the stock is right now (technicals that matter for the trade)
STRT is not stretched. It is in a spot where the chart can resolve either way, which is exactly why the trade needs a tight thesis and a clear stop.
- Price: $79.49 (vs. prior close $79.58).
- 52-week range: $31.57 to $86.47.
- 10-day SMA: $81.53 (price below it, modest near-term pressure).
- 20-day SMA: $79.16 (price essentially sitting on it).
- 50-day SMA: $76.88 (price above it, trend not broken).
- RSI: ~50.95 (neutral, not overbought).
- MACD: bearish momentum with histogram at -0.145 (near-term caution).
Translation: we are not chasing a parabolic move. We are looking at a stock consolidating under a recent high, with neutral momentum and a slightly bearish MACD. That’s fine for a trade if you’re buying with a plan and not trying to predict the next tick.
Liquidity is the other practical note. Average volume sits around 43k to 47k shares (2-week average 43,751, 30-day average 47,086). This can move quickly on modest order flow. If you size it like a megacap, you’ll regret it.
Valuation framing: why this can rerate
Without dragging in peer comps, you can still make a clean valuation argument: STRT is priced like a company the market doesn’t fully trust, yet the financial profile suggests it deserves more benefit of the doubt than many suppliers.
At about 14x earnings and under 0.6x sales, you are not paying a premium. Meanwhile, enterprise value is around $247.6M against that cash flow profile, which is why the EV/Sales of ~0.43 and EV/EBITDA of ~6.27 look compelling. If STRT merely sustains decent operations and avoids a margin stumble, the multiple can drift higher simply because “cheap and stable” tends to get noticed eventually in small caps.
In other words, this isn’t a heroic growth bet. It’s a bet that the market stops discounting STRT like it’s one bad quarter away from trouble.
Catalysts (what could move the stock in the next 45 trading days)
- Retest of the recent high: STRT already proved it can trade in the mid-$80s. A simple sentiment shift in industrials or small caps can push it back toward $86+.
- Follow-through on operational transformation: If management’s automation and execution efforts continue to show up in margins (as suggested in the Q1 FY2026 commentary), the market may reward the consistency.
- Acquisition optionality: The earnings call commentary referenced potential future acquisitions. Even without a deal, the idea that the company is thinking offensively can support the stock.
- Short positioning can amplify upside: Short interest was 170,794 shares as of 12/31/2025, about 3.19 days to cover. That is not extreme, but in a low-float stock (float ~4.05M), it can add fuel on a breakout.
Trade plan
I like STRT as a mid term (45 trading days) long. The chart is consolidating, the valuation is not stretched, and the stock has a clear reference point overhead (the 52-week high). Forty-five trading days is long enough to let a small-cap supplier digest and then move, but short enough that you are not marrying the cycle.
- Direction: Long
- Entry: $79.50
- Target: $86.40 (just below the $86.47 52-week high)
- Stop loss: $75.90 (below the 50-day SMA zone around $76.88, giving room but defining risk)
How I’d manage it: If STRT pushes into the mid-$80s quickly, I would expect chop near the old high. That’s where you either take the win, or tighten risk and see if it can break through. If it loses the mid-$76 area with authority, I don’t want to debate it. The point of this setup is that the trend is intact. If it isn’t, the trade is wrong.
Risks and counterarguments
This trade works if STRT behaves like a steady cash-generating supplier that is gradually being repriced. There are real ways it can fail.
- Cyclical demand risk: STRT is tied to automotive production. A downturn in OEM build schedules can hit volumes quickly, and suppliers rarely get the benefit of the doubt in those periods.
- Operational disruption risk: Management commentary referenced industry disruptions (supplier fire, semiconductor shortages). Even if STRT executes well internally, supply chain shocks can pressure margins or delay shipments.
- Small-cap liquidity risk: With average volume around 43k to 47k shares and a float near 4.05M, price moves can be sharp and gappy. Stops may not fill exactly where you want them during fast tape.
- Technical momentum risk: MACD is currently flagged as bearish momentum. If sellers press it and the stock can’t reclaim the 10-day average (~$81.53), this can drift and tie up capital.
- Multiple stays cheap (the value trap argument): The counterargument is straightforward: auto suppliers often look cheap for a reason, and the market may keep STRT at a low multiple because investors assume peak-ish earnings or fear the next downturn.
The counterargument I take most seriously is the last one. A low EV/EBITDA (~6.27) and low P/S (~0.58) can persist for years if the market believes earnings are cyclical and not durable. That’s why the trade is framed around a defined technical level and a realistic target, not an open-ended rerating story.
Conclusion: clear stance, and what would change my mind
I’m constructive on STRT here. The combination of modest earnings valuation, very low leverage (debt-to-equity ~0.02), and meaningful free cash flow ($65.06M) is the kind of setup that can surprise investors when the company simply keeps doing its job. With the stock at $79.49 and a clean reference point at $86.47, the risk-reward is attractive enough to take a defined shot.
What would change my mind is straightforward: if STRT breaks and holds below the mid-$76 area (the region around the 50-day SMA), the trend support thesis is gone and I would rather step aside. The other reason to get less bullish would be if the stock pushes back to the mid-$80s but can’t hold gains, because that would suggest the market is still treating rallies as sell opportunities.
Until proven otherwise, I see STRT as a classic overlooked supplier: not exciting, but priced like it’s fragile. If it isn’t, the upside is a retest of the highs on a fairly reasonable timeline.