Best stock ideas - September 11

Analyst Sean Dunlop maintains an optimistic stance on Etsy, registering the vibrantly growing firm as a long-term winner in the e-commerce scene. Despite experiencing soft near-term prospects, Etsy's strategic skill has seen it flourish during the COVID-19 pandemic, stepping up as a primary outlet for purchasing face masks and driving up its active buyer base to 95 million. It continuously invests in its platform, enhancing the search functionality and buyer protection program, and foreseeably leading to a mid-single-digit growth in annual per buyer spend in the coming decade. It also aims to onboard unique inventory, expand its international operations, and refine its suite of seller tools and advertising options. Although it foresees competition from local players and concerns regarding the frequency of items on the platform, these are balanced by the potential upside from Etsy's investment in platform trust, an advantageous offsite advertisements scheme, and a robust target market despite its narrowed focus. The company has carved out a promising competitive niche and is reaffirming its commanding position.

Read the full article here (paywall). Read time: 14 min

The author shares a bearish sentiment on Texas Instruments (NASDAQ:TXN) and recommends selling at the current price. The stock has undergone a promising growth over the past five years, but recent developments such as declining margins, weakening demand across all but one of its segments, and a deteriorating balance sheet suggest a shift in trends. While the company has witnessed significant growth in its automotive segment, this has not been enough to offset the losses in other sectors that account for a larger proportion of the revenue. Moreover, TXN's increasing inventories coupled with the rising long-term debts burden the company's financial health. A DCF analysis by the author suggests that TXN might be overvalued by as much as 23%. Given these factors, the author concludes that Texas Instruments at this stage is a risky investment, and it should be avoided until there is a return to sales growth and margin expansion

Read the full article here (5 free per month). Read time: 4 min

ATRenew Inc. is a company focused on sustainable business practices and recycling. They have achieved impressive growth in revenue and profitability in Q2, exceeding projections and forecasts. The surge in revenue was driven by consumers embracing pre-owned products and trading old items for new ones. ATRenew aims to evolve its B2C business model and launch new ventures grounded in user trust and operational proficiency. They have made significant improvements in terms of losses and achieved sustained profitability by utilizing AI and data innovations to enhance quality inspection systems and optimize fulfillment costs. The company has also shown progress in improving margins and streamlining efficiency. ATRenew has exhibited post-pandemic resilience in its recycling business and has expanded its market reach through partnerships with JD.com and Apple. They have integrated into Apple China's retail system and secured high-quality supplies through authorization to bid for and distribute Apple's phones. ATRenew is experiencing significant growth in the multi-category recycling sector and has expanded its operations centers across China. They have also made progress in sustainable operations and reducing greenhouse gas emissions. Overall, ATRenew is focused on sustainable practices, innovation, and partnerships to drive growth in the recycling and consumer electronics sectors.

Read the full article here (5 free per month). Read time: 3 min

The author is bullish on Aston Martin (ARGGY) based on its promising resurgence driven largely by the strategic investments and partnerships brought by Canadian billionaire Lawrence Stroll, who took over the company and controls about 25% of it. The company obtained further support from the Saudi Arabia's Public Investment Fund (PIF), Chinese car manufacturer Geely and Mercedes-Benz Group, making Aston Martin backed by a formidable group of strategic shareholders. Stroll's clear vision, capital, and strategic hiring of executives and partnerships have primed the company for the forthcoming EV revolution, which the author suggests will drive future success. Stroll has ushered in major technological advancements and established new partnerships and models, all of which are beginning to yield positive commercial results evidenced by increased car sales and improved financial numbers. Additionally, strong performance in Formula 1 and comparisons to the Italian luxury brand Ferrari suggest a strong positive image and marketing potential for Aston Martin. Despite past financial difficulties, Aston Martin's improved risk/reward ratio and comparison to Ferrari's market capitalization suggest significant upside potential for the stock.

Read the full article here (5 free per month). Read time: 4 min

The article details DocuSign’s (DOCU) recent financial performance, noting key highlight of achieving $711.2 million in billings, a YoY increase of 10%, and beating expectations. DOCU also gained approximately 37,000 new customers, increasing the total base to 1.44 million. Despite potential challenges in retention rates and driving future growth, the author presents an optimistic view of the DOCU share due to it exceeding market expectations, on-going product developments, like the introduction of AI-powered identity verification, and strategic financial decisions such as strong international growth and share repurchase programs. However, potential deceleration in billings growth due to macroeconomic factors is noted as a risk. Overarching this, the author suggests that DOCU’s valuation is improving and is currently trading at an EV/EBITDA multiple of 14x, which compared to Adobe's 25x, seems to be quite favourable.

Read the full article here. Read time: 6 min

The author of this article believes that Warner Bros. Discovery is undervalued, largely as a reaction to an increasingly volatile media industry. With cable TV subscribers on a steady decline, and a significant amount of debt taken on during the merger between Warner Bros. and Discovery, the company shares have dropped more than 50% since early April 2022. However, the author points to numerous reasons why this could be seen as a buying opportunity rather than a warning signal. These include the company's strong channel viewing numbers which cost less than most of their competitors, a proactive CEO who has a history of securing beneficial deals, a streaming service that has already been successful, and a price-to-free-cash-flow multiple of just 5.7x (a FCF yield of nearly 18%). Despite acknowledging the risks, the author maintains a bullish stance on Warner Bros. Discovery.

Read the full article here. Read time: 6 min