I am long Strattec Security Corporation (NASDAQ: STRT) with a 2-4 year investment horizon.
The physical car key is 115 years old. It is finally dying. And that is excellent news for one specific stock.
While the headlines belong to the EV giants and autonomous driving software, a quieter, more fundamental transformation is happening in the automotive supply chain. Strattec Security Corporation, a legacy manufacturer once known for mechanical keys and locks, is rapidly reinventing itself as a critical player in the digital access revolution.
Under the leadership of new C.E.O. Jennifer Slater, the company has shed its "sleepy industrial" reputation. By pivoting toward high-tech power access systems and digital authentication, Strattec is capturing value where hardware meets software. With the stock up roughly 100% in 2025, the market is waking up to what I call the "Smart Access" thesis.
The Big Picture: The "Smart Access" Shift
The days of the simple metal car key are effectively over. Modern vehicles require complex, integrated access systems—power liftgates that open with a gesture, door handles that present themselves automatically, and "Phone-as-a-Key" (PaaK) technology.
This is Strattec’s new competitive moat. The company has successfully transitioned its core competency from mechanical security to mechatronics. As automakers race to make vehicle entry seamless and software-defined, Strattec provides the essential "last inch" hardware—the latches, actuators, and controllers—that make these digital features physically work.
Execution: The Slater Effect
The most compelling catalyst for Strattec is not just the product, but the execution. The arrival of Jennifer Slater in mid-2024 marked a decisive shift from maintenance to modernization.
The results are already showing up in the numbers. In their Fiscal Q1 2026 results (reported October 31, 2025), Strattec delivered a stunning earnings beat, posting Adjusted E.P.S. of $2.22 against estimates of just $1.48.
This is operational discipline. Slater’s team has:
- Aggressively optimized the manufacturing footprint, moving from three shifts to two in key facilities.
- Secured over $8 million in annualized pricing increases.
- Stripped out $5 million in structural costs.
The takeaway: Strattec has proven it can wring massive profitability out of flat or modestly growing top-line revenue.
Strategic Growth Drivers
Strattec is improving its "content per vehicle."
- The Power Access Boom: Strattec’s "Invis-A-Rise" power tailgate systems are gaining traction. Electric vehicles often lack traditional grilles or engine noise, so they differentiate themselves through "experiences"—like automated doors and trunks. Strattec’s portfolio is purpose-built for this trend.
- Digital Keys: The company is moving deep into the digital ecosystem. As O.E.M.s move toward smartphone-based access, Strattec is supplying the secure hardware infrastructure required to execute it safely.
Assessing the Risks
Strattec is a high-conviction play, but it carries distinct risks.
- Valuation Run-Up: The stock has doubled in 2025. While the P/E ratio remains reasonable (approx. 14x forward) due to exploding earnings, the "easy money" from the initial valuation reset has been made.
- The Tariff Cloud: With significant manufacturing operations in Mexico, Strattec is sensitive to trade policy. Management estimates potential tariff impacts of $9–12 million annually, though they have been proactive in mitigation strategies.
- Detroit Dependence: The company still relies heavily on the "Big Three." Any labor disputes or strategic shifts at a major customer like Stellantis or G.M. could materially impact the order book.
Conclusion
Despite the dramatic rise in share price this year, I view Strattec as a long-term hold. We are witnessing a structural re-rating of a company that has successfully bridged the gap between old-world manufacturing and new-world tech infrastructure.
For investors looking for exposure to the "software-defined vehicle" without paying 50x revenue for a software stock, Strattec represents the pragmatic, profitable alternative.
To see our post on Yahoo Finance, click here: Yahoo Finance
Disclosure: This article expresses my own opinions and is for informational purposes only. It should not be construed as investment advice. Please do your own research before making any investment decisions.
