"The wheel was man's greatest invention until he got behind it" -- Bill Ireland

With a car stolen every 25.3 seconds in the U.S., LoJack (NASDAQ:LOJN), the leading provider of wireless security and tracking products, seems like a can't-miss investment. Well, it wasn't today.

This morning, the company reported that revenue increased for the 10th straight quarter, and earnings per share rose for the fifth consecutive quarter. The market greeted the news by sending the stock down 8% in early trading, though it has recovered a bit since. What gives?

Gross margins fell from 51% to 49% (the company controls costs by having Motorola (NYSE:MOT) manufacture its devices), but operating income jumped to $12.4 million from last year's $3.1 million. So, that's not likely the problem.

International markets, a drag on earnings as they were being ramped last year, delivered a 50% bump to fourth-quarter sales. With cars not much safer outside the U.S., overseas markets help LoJack leverage the company's development costs over a larger sales base. That's good, too.

Management's previous goal of getting more of its U.S. revenue through third-party installers also seems to be working. Third-party revenue is up from 8% of sales last year to 18% in 2003. That growth, and its positive impact, is expected to continue in 2004.

On Feb. 18, the company announced that it's working on the next-generation LoJack system, which will utilize global positioning system (GPS) and cellular technology. Next year, it expects to start seeing positive financial impact from this effort, which will reduce costs and allow systems to be installed in "more covert locations." The future sounds good, too.

Even as it expands and develops for the future, LoJack expects a 10% increase in revenue and a 20% increase in earnings for full-year 2004. And that seems doable, especially given that the company's tracking services are currently available in only 21 states and 25 countries.

At 20 times earnings, LoJack looks fairly reasonable. With only 15.3 million shares outstanding, its market capitalization is a mere $122 million, which makes it a small cap with a name many have heard (just the kind Tom Gardner digs up in his Motley Fool Hidden Gems). Add in the fact that there is no debt, and what's not to like?

So why isn't LoJack a bottle rocket like Taser (NASDAQ:TASR)? Frankly, it is the slow and steady growth. But didn't the tortoise beat the hare in the long run? Maybe the key is to get Electronic Arts (NASDAQ:ERTS), Activision (NASDAQ:ATVI), and Take-TwoInteractive (NASDAQ:TTWO) to install LoJacks in those cars constantly stolen in their games. It certainly wouldn't hurt.

W.D. Crotty reads Motley Fool Hidden Gems religiously. If you'd like to take a free trial, click here.

Fool contributor W.D. Crotty does not own stock in any companies mentioned.