Best stock ideas for September 22

The author believes AMD has substantial growth prospects due to its recently released Genoa-X and Bergamo processors which strengthen AMD's position in high performance computing. Particularly, the Genoa-X offers improved performance for technical computing, achieving over two times the performance of the 4th Gen Intel Xeon Platinum 8490H 60 Core in certain tests. AMD's EPYC processors have seen accelerated adoption, especially for enterprise server tasks requiring higher precision and specifications. AMD's investment in AI technologies, notably its recently introduced MI300X GPU, which delivers 80% of Nvidia's performance and is expected to improve with future updates, also strongly positions the company for future growth. The company has a substantial presence in gaming console processors, offering a stable revenue stream. However, the author notes reduced revenue forecasts for the gaming segment due to lessened consumer spending. Despite that, they argue that AMD's EBITDA forecast and net debt reduction, along with their discounted FTM valuation period, justifies a $137 stock price target, yielding a 40% upside potential by 2025.

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The author is bullish on Otis Worldwide Corporation (OTIS), a company that specializes in the manufacturing and development of elevators, escalators, and related systems. Despite the decline in New Equipment market, the author highlights that Otis' profits are predominantly driven by Maintenance and Modernization sales, which are expected to grow regardless of macro-economic conditions. The company's strong backlog assures that Otis' New Equipment sales continue to increase. Although Otis faces market decline in New Equipment orders, especially in China, it is believed to have a limited impact on the overall earnings. The author cites Otis’ focus on large infrastructure and industrial projects as a key factor in its resilience. Furthermore, the company has continued to demonstrate a strong growth in Maintenance sales. Management expects a growth of around 10% in Adjusted EPS in 2023. The author projects a total return of 66% (17.2% annualized) by the end of 2026 and continues to maintain a Buy rating on OTIS.

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Analyst Seth Goldstein maintains a bullish stance on International Flavors & Fragrances (IFF), a global leader in the specialty ingredients industry. The company recently secured modifications to its credit agreement permitting higher leverage over the next nine quarters until 2025, while also agreeing to pay slightly higher interest rates and maintain its current divided rate. Goldstein's optimistic outlook stems from the expected sale of IFF's Lucas Meyer cosmetic ingredients business by the end of 2024, which should allow the company to remain within the newly adjusted covenant restrictions. Goldstein perceives a margin of safety in IFF's current valuation and predicts a price rebound following the closing of the business sales and profit recovery. IFF's diversified business, spanning value-added products in numerous sectors, further solidifies the company's resilient future prospects, accounting for potential market uncertainties. Maintaining a price target of $130 per share, Goldstein reaffirms IFF as undervalued and a potential profitable investment.

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The author expresses strong reservations about the investment potential of Klaviyo, despite acknowledging its position as a market leader. They identify three key concerns regarding the company's prospects. Firstly, Klaviyo is heavily reliant on a singular revenue stream, which involves charging clients based on their subscriber count for sending emails and texts. This model is perceived to lack scalability, especially since the company neither offers supplementary services, such as funnel building or promotion, nor other revenue diversification strategies. As a result, they've resorted to raising prices, which could further alienate their customer base. Secondly, Klaviyo faces stiff competition from dominant players like Shopify, which is reportedly developing a Klaviyo alternative, and other service providers like Mailchimp, Omnisend, Sendinblue, Mautic, and possibly Attentive. These competitors offer more cost-effective solutions, diminishing Klaviyo's competitive edge. Lastly, the author critiques the quality of Klaviyo's platform, suggesting it lacks distinctiveness and has no significant barriers to entry. With numerous developers creating similar platforms, some imitating Klaviyo at a lower cost, Klaviyo's unique selling proposition seems to be waning. This critique is accentuated by Klaviyo's current valuation of roughly $10 billion, juxtaposed with its revenue losses from the previous year, hinting at potential overvaluation.

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The author presents a bullish case for investing in Las Vegas Sands Corp., arguing that the market is currently undervaluing the company's stock. The company's robust presence in Asia, particularly in recovering markets like Singapore and Macau, and its resilient performance despite economic strains in China, position it for growth. The author also highlights the company's strong balance sheet, low debt as compared to peers, and the potential for further expansion. He dismisses concerns regarding the company's leadership and its decision to exit from Vegas, seeing these as opportunities for the company to focus on emerging markets. Plus the potential bidding for a gaming license in NYC could be a game changer. The author, therefore, views LVS as a 'screaming buy' at its current price, with an expectation of reaching a price target range of $75-$80 by early Q4 2024, despite the current market's indifference to the sector.

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Kuppy, the founder and CEO of Mongolia Growth Group (MGG) or ticker YAK, has been generating strong returns on the portfolio. MGG strategies include selling properties and reinvesting the proceeds in marketable securities and stock buy-backs. Despite difficulties with the Mongolian real estate market due to poor government policy, MGG has incubated a new subscription service for investors, KEDM, providing substantial returns. As of Q2 2023, the total assets include C$ 1.16 per share in marketable securities with a NAV of C$ 1.62 per share, compared to a current share price of MGG of C$ 1.42. With an estimated current NAV of roughly C$ 1.80 per share, this presents a discount of over 20%. The author notes that due to its financial success, the company needs to avoid being labeled as a Passive Foreign Investment Company (PFIC) making either liquidity or owning operational assets necessary. Hence, there is a potential for the company to either find something to acquire and transform itself or return capital. As it stands, investments are maturing well, suggesting a promising outlook.

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