Best trade ideas for August 25

Walt Disney (DIS) is a global media and entertainment company. The analyst has a $145 price target on the stock. The stock is the lowerst it’s been since 2014, but the analyst believes Disney is successfully transforming its business for the streaming future, though subscriber growth for Disney+ and Hulu was weaker than expected. Key highlights include Disney's strong franchise library including Marvel, Star Wars and Pixar that will continue driving streaming growth. The analyst sees upside in parks/resorts post-pandemic as they remain a top family vacation destination. ESPN has enduring brand strength with its sports rights and high fees. The Fox acquisition expanded Disney's content monetization abilities. Risks include adapting to the changing media landscape, volatile box office results, and labor relations. But investments like the Fox assets and Disney+ with its 164M subscribers position it well long-term, though near-term uncertainty remains high given competitive streaming landscape and economic exposure.

Click here to read the full article

Afya (AFYA) provides medical education services in Brazil. The author calculates an intrinsic value of $29.35 per share, representing a 100% upside from the current price of $14.68. He believes Afya is positioned to benefit from Brazil's favorable demographics driving increased demand for healthcare and medical education. Afya is the leader in medical seats and has grown students across undergrad, continuing ed and digital services. It has efficiently converted more students to free cash flow while maintaining a strong balance sheet. The valuation looks attractive based on DCF and relative to peers. Risks include dependence on acquisitions and Brazilian regulations. But with its strengths and macro tailwinds, the author rates Afya a Strong Buy.

Click here to read the full article

Nordstrom (JWN) is an upscale fashion retailer operating department stores and off-price outlets. The analyst maintains a $40 fair value estimate on JWN shares, which he views as undervalued. JWN reported better than expected Q2 results and reiterated full-year guidance. The analyst sees signs of progress in strategic initiatives like expanding private label brands, controlling costs and improving Rack selection and online offerings. JWN maintains strengths including a loyal customer base, differentiated merchandising and leading e-commerce capabilities. However, JWN faces competitive threats from discount retailers, declining mall traffic and direct-to-consumer brand efforts. Execution risks also remain as JWN operates in a difficult retail environment. But the analyst believes JWN can drive margin expansion to near 6% and deserves a higher valuation, making the shares compelling at current levels.

Click here to read the full article

AZEK (AZEK) is a manufacturer of engineered outdoor living products including composite decking, railings, trim and accessories. The author values AZEK at $42.50 per share, representing 33% upside from the current share price. AZEK is a leader in wood-alternative decking and has grown sales at a 16.5% CAGR since 2016, supported by brand strength, distribution network, and material science expertise. Growth slowed in fiscal 2023 due to inventory adjustments but is rebounding with Q4 expected up 20% YoY. Long-term organic growth is forecast at 10%+ driven by wood conversion and new products. Margins should expand from 22% to a 27.5% target by 2027 via cost savings and operating leverage. The valuation gap to competitor Trex seems unwarranted given AZEK's growth prospects. The author sees AZEK shares as undervalued given the growth outlook and potential for margin expansion.

Click here to read the full article

Genus PLC (GNS) breeds elite livestock genetics, especially pigs, which it sells to commercial producers globally. The stock has underperformed recently due to cyclical factors in China, its largest market. These include lower pork demand from COVID lockdowns, oversupply from African swine fever, and higher input costs squeezing producer margins. Genus has continued investing in increased capacity in China and innovative technologies like gene-edited pigs resistant to disease. Although profits and cash flows have suffered in the short term, the author remains confident in the long-term growth outlook. Pork demand in China should recover and Genus is well-positioned to gain share in a consolidating genetics market. While success of technologies like gene-edited pigs is uncertain, the author sees Genus at the start of a potential multi-decade upturn. Despite recent stock weakness, Genus’s business fundamentals appear intact.

Click here to read the full article

Intrusion (INTZ) provides cybersecurity solutions. The author believes INTZ shares, currently around $0.70, could reach $5-6 within the next 18 months, representing a potential 7-bagger. While recent results have been disappointing, the author argues the business has turned a corner. INTZ has a large contract in the final stages that could be worth up to $2M annually. Partnerships with Netgate, SEIC and others also position INTZ for future growth. After raising $9.5M, INTZ can hire a sales executive and potentially make an accretive acquisition to accelerate growth. Risks include further dilution and lack of concrete guidance, but the author believes the risk/reward is attractive at current prices.

Click here to read the full article