Is NSSC a good stock to buy? We came across a bullish thesis on Napco Security Technologies, Inc. on InfoArb Sheets’s Substack. In this article, we will summarize the bulls’ thesis on NSSC. Napco Security Technologies, Inc.’s share was trading at $35.14 as of June 9th. NSSC’s trailing and forward P/E were 34.16 and 24.69 respectively according to Yahoo Finance.
Angelo Giampiccolo/Shutterstock.com
Napco Security Technologies, Inc. (NSSC) is a security hardware and services company increasingly driven by high-margin recurring service revenue (RSR), which exceeds 90% gross margins versus roughly 29% for equipment, making mix a key profitability driver. In Q3 2026, the company delivered solid operational performance, with revenue rising 11.8% year over year to $49.2 million and non-GAAP EPS increasing 39.3% to $0.39, alongside adjusted EBITDA margin expansion to 32.2%, reflecting strong operating leverage.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
While GAAP EPS fell to $(0.01) due to a $16 million litigation settlement, underlying performance remained robust, suggesting the core business continues to scale despite one-time distortions. Management’s commentary highlighted a more compelling forward narrative centered on RSR growth, particularly driven by Starlink fire radios and the ongoing copper-to-cellular conversion opportunity, which still has a long runway given the large installed base.
Additional growth drivers include MVP cloud-based access control, expected to begin contributing meaningfully to recurring revenue in late 2026, as well as demand in school security, multifamily smart locks, and broader distribution expansion. Equipment margins are also improving due to better pricing discipline, product mix, and manufacturing leverage from its Dominican Republic facility, which additionally offers a tariff advantage versus peers.
The company’s balance sheet remains a key strength, with $125 million in cash and no debt, supporting M&A optionality. While risks include tariff exposure, working capital management, MVP execution timing, and the cash impact of the settlement, Napco appears to be transitioning into a higher-quality recurring revenue and margin expansion story, with multiple levers for sustained growth and profitability.
Previously, we covered a bullish thesis on Axon Enterprise, Inc. (AXON) by RadnorCapital in March 2025, which highlighted strong AI-driven product expansion, international and enterprise booking acceleration, and a sustained 30%+ growth compounding profile supported by record contracted bookings. AXON’s stock price has depreciated by approximately 9.37% since our coverage. InfoArb Sheets shares a similar view but emphasizes Napco Security Technologies, Inc. (NSSC) recurring revenue mix and margin expansion as the core value driver.
Napco Security Technologies, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held NSSC at the end of the first quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of NSSC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NSSC and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
