Best stock ideas for September 25

The author presents a damning critique against Troops Inc, accusing it of defrauding investors. They claim the majority of subsidiaries are non-operating shells used to siphon money. Further suspicions arise from unsecured insider loans to the CEO, later inexplicably transferred to unrelated entities. Heightening concerns, major Troops shareholders were embroiled in a $475 million insurance fraud in Hong Kong, with implicated individuals having ties to Troops, suggesting the company's role in obscuring asset ownership and illicit asset transfers abroad. Additionally, the author alleges Troops manipulates its accounting, using tactics like stock payments to undisclosed parties to artificially enhance financial metrics. The overarching narrative suggests Troops is siphoning funds from investors through sham subsidiaries, deceptive financial transfers, and doctored accounts. Given these allegations and perceived lack of genuine business operations, the author anticipates the stock's eventual plummet to worthlessness as purported frauds come to light.

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The author presents a bullish perspective on Nu Holdings Ltd. (NYSE:NU), viewing it as an exciting long-term opportunity offering considerable asymmetric upside, given its disciplined growth strategy and strong market position in the Latin American neo-banking industry. Although the stock is currently down 22% from its IPO price of $9, the author anticipates a near doubling of the share price over the next two years. Key strengths of the company include its growth in average revenue per active customer, consistent expansion of its customer base, a remarkable 860 BPS expansion in net interest margin, and cost discipline that avoids diluting shareholders. Risks include macroeconomic conditions in developing countries such as Brazil where Nu operates, the company's relatively high valuation, and a rising rate of non-performing loans. However, the author contends that Nu's strengths outweigh these risks, offering a base case price target for September 2025 of $14.1. The bear case scenario presents -4% IRR, which the author considers highly improbable, while the bull case proposes a potentially lucrative 69% IRR. Despite these assessments not constituting professional investment advice, this analysis offers an informative evaluation of Nu's prospects.

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The author is bullish on National Vision (EYE) due to its strategic position in a fragmented, but increasingly growing eyewear retail market dominated by recurring revenues. From 2002 to 2019, EYE experienced positive YoY figures despite economic downturns, owing to its value offering attracting both insured and uninsured customers. The overall ageing of the US population and the increased damage to eyes due to screen time are fueling the market's expansion. EYE's expansion strategy anchored in low-cost real estate, direct employment of optometrists, and leveraging of scale for bulk purchasing, has led to a consistent 6% YoY growth in footprint for the past 15 years. Furthermore, the adoption of remote optometry is poised to boost EYE's productivity and reduce operating costs. Despite potential threats, such as face reductions in customer satisfaction, growing optometrist shortage, and increased competition, the author argues that recent negative Walmart news and temporary headwinds have presented an attractive buy-low opportunity. Though the author foresees margin recovery and consistent growth through 2025 with a solid risk/reward.

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The author argues that Marlowe plc, a UK based company specialized in governance, risk & compliance (GRC) and testing, inspection & certification (TIC) services, is a largely under-appreciated and increasingly high-quality business. Given the company's 20%+ compound annual growth rate in earnings and free cash flows expected over the medium term, paired with potential for multiple expansion from current levels of 8x trailing 12-month EBITDA and 14x free cash flow, the stock might provide more than 30% annualized returns over the next 3-5 years. Even if management were to decide to sell one or both divisions of the business, the inherent breakup or sum-of-the-parts value and the strong 'downside' protection that such divestitures could provide, is hardly accounted for in the current valuation. The author sees minimal fundamental downside risk, given the company's geographical diversification, fragmented and scalable markets, predictable recurring revenues, long-term customer relationships, and resilience to changes in the economic environment. Furthermore, management's proven ability to grow revenue organically along with their efficient capital allocation strategy allows multiple expansions that increase shareholder value. The author sees the downsides as pertaining mainly to one-off/restructuring costs and skepticism over free cash flow generation. However, they remain confident these points will come to be resolved within the next year.

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The analyst is bullish on Yatra (YTRA), one of the leading online travel companies in India, due to the burgeoning Indian tourism and travel industry. The company has significantly improved its performance over time by increasing its take rate and maintaining strict cost controls. Yatra's India IPO closed at a significant premium to its ADR shares, which the analyst believes provides an arbitrage opportunity for ADR investors. The analyst also notes that Yatra is relatively undervalued compared to its competitor, MakeMyTrip (MMYT). The analyst also highlights the strong recovery of the Indian tourism industry from the impact of the pandemic and forecasts a potential growth contribution to GDP, which they believe will benefit YTRA. However, risks to this bullish thesis include the company's reliance on the Indian economy and travel industry and its ability to continue charging higher take rates due to the fragmented nature of the industry and competition from larger brands. The analyst initiates with a strong Buy rating and a target price of $3.5.

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Equity Analyst Brett Castelli highlights Bloom Energy's business evolution and outlook, noting the company's primary product, the Bloom Energy Server, as a key driver. The Server is a product tailored for reliability, emission reduction, and cost savings for commercial and industrial customers. Despite historical sales dominating in just four to five American states and South Korea, the company aims to lower product costs and broaden its domestic and international appeal. Additional strides into the electrolyzer market are seen as significant due to synergies with existing fuel cell technology and solid oxide technology suitability for nuclear pairing applications. In his analysis, Castelli acknowledges Bloom’s achievements in extending fuel cell life and expanding into electrolyzer markets, but he also points out concerns over flat US sales, concentrated sales geographies, and the novelty of the electrolyzer product potentially failing to gain traction within a competitive marketplace. Regardless of the company lacking an economic moat, the analyst projects an estimated fair value of $18 per share, forecasting approximately 25% annual revenue growth through 2026. Potential risks include geographic concentration, limited scale of commercial shipments, changes in natural gas prices, environmental restrictions on natural gas use, and policy changes in South Korea.

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