Upstart reported strong 1Q23 earnings with net revenues slightly above guidance and increased contribution margin. The company expects to reach EBITDA breakeven in 2Q23, backed by workforce reductions and spending optimization. Upstart has also secured multiple long-term funding sources, expected to bring $2 billion in the next 12 months, which will enhance business resilience and predictability. The company is expanding its product offerings beyond personal loans, entering the auto retail lending and home equity markets, thereby diversifying its revenue sources. The financial health of the average US consumer seems to have stabilized or improved in 1Q23, according to the Upstart Macro Index. Despite these positives, the company needs to continue investing in innovation to remain competitive. The market may be underestimating Upstart's potential for EBITDA positive results in 2023, which could lead to further upside revisions to EPS and EBITDA.

The author is bullish on Dropbox, citing its strong brand and loyal customer base. The company has demonstrated solid profitability metrics expansion as it scaled up, generating free cash flow and being substantially undervalued. Dropbox offers cloud storage with cross-platform synchronizing and had about 17.8 million paying users at the end of FY 2022. The company has delivered a substantial 21% revenue CAGR between 2015 and 2022, with gross margin more than doubling from 33% to 81%. The company reinvests a substantial 39% of its revenue to R&D, meaning a strong commitment to innovation. While the company faces temporary headwinds due to the current harsh environment, the author believes these are temporary and not secular. Dropbox operates in a highly competitive cloud storage business and faces cybersecurity risks. The author performed a discounted cash flow (DCF) valuation exercise and found that DBX has 24% upside potential under conservative assumptions and over 50% upside potential under moderately optimistic assumptions. Despite the risks, the author believes DBX stock is a "screaming buy" with massive upside potential and assigns it a "Strong Buy" rating.

Western Digital is a top supplier of hard disk drives with a 37% market share. The company has beaten expectations for the top and bottom line despite a cyclical pullback in industry demand. Talks of a potential merger with JV partner Kioxia and a spin-off of its hard drive business could unlock greater shareholder value. Activist investor Elliot Management believes Western Digital could reach over $100 per share within a 12 to 18-month period following a merger or spin-off, representing a strong upside potential of ~150%. The decline in revenue was mainly driven by a cyclical pullback in the storage market, which is short-term by nature. The Cloud segment reported $1.2 billion in revenue, down 32% YoY due to cloud providers and enterprises scaling back capital expenditure, but the trend towards digital transformation of businesses is still strong. The Consumer application market reported $600 million in revenue, down 29% YoY due to more consumers utilizing cloud storage instead of purchasing external hard drives. Western Digital's gross margin decreased by 21.1% YoY due to charges related to underutilization of manufacturing facilities and inventory price adjustments. The author has used a discounted cash flow model to value Western Digital and forecasts a fair value of $51 per share, which is 24% higher than the current trading price of ~$39 per share.

The author recommends buying BigCommerce (NASDAQ:BIGC) due to the long runway for ecommerce growth and BIGC's opportunities to capture market share, particularly in the Enterprise market. While BIGC faces challenges operating in a challenging environment and refocusing sales efforts on the large enterprise sector, the improved pipeline quality makes it a worthwhile sacrifice. BIGC's investment in and strong position within the mid-market should allow for realizing unit economics competitive with those of the enterprise and benefiting from shorter sales cycles. Multiple metrics show slowing growth, particularly in enterprise ARR growth, due to longer sales cycles maintained by larger Enterprise customers. However, BIGC's management has reiterated its previous projection of positive EBITDA by 4Q23 and increased its EBIT guidance for 2023. BIGC is at the forefront of the second wave of SaaS solutions entering the e-commerce market, providing a platform that gives retailers more freedom of action, personalization, and integration. Despite intense competition in the industry, particularly from strong balance sheet competitors like Shopify, Block, Salesforce, Adobe, Oracle, and SAP, BIGC's strong position in the growing ecommerce market, investment in enterprise functionality, and ability to compete for larger opportunities make it a buy recommendation.

Vodafone's weak growth prospects and track record have led to a discounted valuation and recent share price performance. The merger with CK Hutchison's Three U.K. unit may improve profitability and achieve cost synergies. Vodafone's investment case is highly geared towards its high-dividend yield, and the company has made efforts to improve its business profile and monetize assets. However, Vodafone's recent earnings have been weak, and the new business plan lacks clear targets, leading to negative investor reaction. The company's largest market, Germany, has seen customer losses impacting service revenues and profitability. Disposal of weaker units is important for better investor sentiment and higher shareholder returns. While growth prospects aren't impressive, the current valuation seems too low, and the U.K. merger may be a catalyst for potential re-rating. A turnaround may take time, but for long-term investors, returns may be good from dividends and share price appreciation. Readers should be aware of the risks associated with investing in stocks that do not trade on a major U.S. exchange.

Northeast Bank (NBN) has undergone a successful turnaround led by Rick Wayne and his team of investors. NBN's business is more akin to a private credit fund, with easier access to capital and a reputation as a bank with sellers that make its legal structure superior to that of its competitors. Despite averaging an 18% ROE from 2017 to 2022 and growing residual/economic earnings per share at a healthy clip, NBN's valuation is extremely cheap, with a market cap of $320M and a P/BV 3Q'22 of 1.1x. Recent massive loan acquisitions will bring more earnings power in the short term, leading to massively skewed earnings growth. NBN operates three business segments: National Lending Division, Community Banking, and Small Business Administration lending. NBN's underwriting strategy is based on common sense, focusing on cash-flowing and current loans with solid credit histories, and avoiding loans secured on assets that are more difficult to underwrite. Despite Northeast Bank's track record of creating shareholder value, the bank still trades at around 1x book value, which is undervalued. Downside risks include higher than expected loan losses, key man risk, and difficult access to funding. Upside risks include NBN reinvesting earnings from the loan book at attractive rates, opportunities for Northeast to buy more loans in the secondary market at attractive prices, and a black swan event that Rick and his team can take advantage of.

CVS Health Corporation's shares have slumped due to comments from UnitedHealth regarding medical costs and a charge for its role in the opioid crisis. Despite this, the company's shares look attractive at current prices due to its cheap valuation. CVS's diversified business model, including pharmacies and walk-in clinics, helps make the company more resilient to external shocks. The recent sell-off of CVS stock due to UnitedHealth's margin expectations may not necessarily affect CVS's own guidance. The $17 billion national settlement regarding the role of CVS and other companies in the national opioid crisis may not have a significant impact on CVS, as they have already set money aside for these lawsuits in the past and may pay the sum over several years. CVS Health has a solid long-term track record and is well-diversified and shareholder-friendly. At current prices, CVS Health trades with a dividend yield of 3.6%, which is around twice the broad market's yield and pretty attractive. On top of that, at just 7.7x this year's expected net profit, the company's shares are very inexpensive. Investors have a buying opportunity here as CVS Health has gotten way too cheap to ignore.

Unit Corporation operates in two segments, Oil and Natural Gas, and Contract Drilling, providing diversification within the oil and gas industry. The company offers attractive upside potential and a significant margin of safety for long-term investors. Positive developments include cash flow generation, debt reduction, share repurchases, and dividend payments. The company benefits from a diverse portfolio of producing wells and a substantial reserve base, with over 63 million BOE in reserves. The Contract Drilling segment benefits from the strong demand for drilling services in the onshore market. The company has a competitive advantage in the oil and natural gas industry due to efficient drilling techniques, low operating costs, and sustained production levels. The presence of Phil Frohlich, Managing Partner at Prescott Capital Management, as interim CEO and a board member ensures that the company's decisions are made with a focus on maximizing long-term shareholder value. The company is attractively valued with a trading multiple of 2.1x EV/EBITDA and a free cash flow yield of 25%. The target enterprise value of Unit Corporation is $570 million, which reaches $710 million or $74.00 per share, representing a 72% upside from the current share price when adding the cash balance of $118 million and the expected proceeds from the sale of Superior Pipeline ($20 million). The risks associated with investing in Unit Corporation include volatility in oil and natural gas prices, regulatory changes and environmental concerns, and geopolitical factors.

The author has upgraded their rating on Virco Mfg. Corporation to a strong buy, citing the company's decent Q1 FY24 financial results and high level of orders and inventories ahead of the peak season as indicators of strong results for the next two quarters. Virco manufactures and sells school and office furniture, generating most of its revenue through resellers and direct-to-customers. The company's Q1 FY24 net sales rose by 8.9%, and the operating loss shrank by 72.3%. The company's gross margin improved to 37.8% from 30.3% a year earlier, benefiting from diminished international supply chain disruptions and price increases implemented on January 1, 2022, and July 1, 2022. The company's order backlog has increased significantly compared to the previous year, indicating potential growth in operating income in Q2 and Q3 FY24. The major risk for the bull case is that California, Virco's largest market, is cutting funding for K-12 schools and community colleges. The company's enterprise value is $102.5 million, and TTM EBITDA stands at $18.4 million, resulting in a 5.6x EV/EBITDA ratio. The FY24 peak summer season is expected to be strong, and Virco should be trading at above 9x EV/EBITDA, translating into $5.99 per share or an upside potential of 41.9%.

Malibu Boats, Inc. is an under-covered stock with substantial market share in a niche industry. The stock has surged by roughly 15% since the turn of the year, and more gains are expected. Malibu Boats has continued to scale despite year-to-date drawdowns in the producer price index for boats and the U.S. consumer sentiment index. The firm bolstered its top line by approximately 8.9% (year-over-year) in its previous quarter, eclipsing analysts' estimates by $31.97 million. Malibu's upward product price adjustment during the past year has led to lower volumes, causing its gross profit margin and EBITDA to fall. The Federal Reserve's announcement pertaining to an early 2024 interest rate pivot will stimulate consumer confidence and result in pent-up demand for durable goods such as boats and vehicles. Malibu might partake in filling customer demand after Hurricane Ian totaled as many as 15,000 boats. Malibu Boats also possesses prospects to cut its costs in the coming year/s. Valuing the stock based on a peer analysis and forward earnings suggests it is undervalued and possibly best-in-class. An absolute valuation formula predicts the stock could reach $96.13 by June 2024, indicating potential upside. However, the company's cash flow statement and employee stock grants pose risks to the stock's valuation. Malibu Boats is an exceptionally volatile stock, which could be unfavorable to new market entrants. Overall, the author believes Malibu Boats has the potential to be a primary breadwinner in the durable goods space and is undervalued.