BOS Better Online Solutions. Unless you're a seasoned investor with a keen eye for the Israeli market, that name probably doesn't ring a bell. But here's the thing: while Wall Street has been busy chasing the latest tech fad, BOS has been quietly, meticulously, and strategically building a dominant position in the booming Israeli defense sector. They've been doing it so subtly that even during their latest earnings call, most analysts completely missed the significance of what's unfolding.

BOS just reported record net income for Q1 2024, a staggering $740,000. It's part of a larger, deliberate pattern of financial growth. Revenue over the trailing twelve months reached $43 million, EBITDA hit $3 million, and their trailing EPS now sits at a robust $0.36. These numbers, on their own, are impressive. But they only tell a fraction of the story.

What the analysts seem to have overlooked is the underlying engine driving this growth: the systematic shift of BOS's business towards the Israeli defense market. During the Q1 earnings call, CEO Eyal Cohen casually mentioned that a whopping 75% of BOS's business is now linked to the Israeli defense segment. This is up from roughly 60% just a year ago (BOSC Q4 2023 Earnings Call Transcript), a rapid and substantial realignment of their core business.

Here's why this is a game-changer: The Israeli defense market is a gold mine. Israel consistently ranks among the top countries in defense spending as a percentage of GDP, and the recent escalation in regional tensions has only intensified this trend. BOS, with its intelligent robotics, RFID technology, and specialized supply chain expertise, is perfectly positioned to capitalize on this surge in demand.

"Consider this: BOS's Intelligent Robotics division, once focused on the civilian market, is now almost entirely serving the defense industry. This division alone is estimated to be responsible for a significant chunk of the 15% increase in defense-related business over the past year. And it's not just robotics. Cohen specifically highlighted expanding the Supply Chain division's offerings to the defense segment, integrating new product lines like specialized wires from US manufacturer WireMasters."

This isn't haphazard growth. It's a calculated strategy. BOS's Chairman, Ziv Dekel, explicitly stated their plan to focus on the "premium segments" in Israel, with the defense and high-tech sectors at the forefront. Dekel also expressed confidence in their "strong competitive position" within these markets, implying that BOS is not merely riding a wave, but is actively shaping the landscape.

BOS's Shift to the Defense Market

The chart below visualizes the rapid growth of BOS's defense-related business, based on information from recent earnings calls.

But here's the most baffling part: the market hasn't caught on. Despite this remarkable transformation and exceptional performance, BOS's market cap has remained virtually stagnant. It hovered around $15 million in late 2021 when their annual earnings were a meager $0.5 million. It's still around $15 million today, even after earnings have skyrocketed by over 365%.

This disconnect is simply astounding. BOS is trading at a price-to-earnings ratio of less than 8, while their book value per share sits at over $3.40. These are valuations more typical of a struggling company, not one demonstrating record profitability and a strategic lock on a high-growth market.

So what's the missing link? Analyst coverage. Cohen himself lamented the lack of coverage, acknowledging that it's the key to exposing BOS's incredible value proposition to a wider audience. He's actively seeking to change this, and once analysts begin digging into the details, the market's perception of BOS is bound to shift dramatically.

In the meantime, astute investors have a rare opportunity to get in on the ground floor of a company poised for explosive growth. While the rest of the market chases hype, BOS is quietly, strategically, and profitably building a fortress in the Israeli defense industry. It's a hidden gem in plain sight, and once the word gets out, catching up to its true value may be a costly proposition.

"Highlights"

Record Net Income: $740,000 in Q1 2024

Trailing Twelve Month Revenue: $43 million

Trailing Twelve Month EBITDA: $3 million

Trailing Twelve Month EPS: $0.36

Dominating the Israeli Defense Market: 75% of business linked to the sector

Strategic Focus: Targeting "premium segments" like defense and high-tech

Undervalued: Market cap remains stagnant despite explosive earnings growth