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Today's top stock ideas (Wed, Dec 20)
Connor Van Ooyen
December 20, 2023
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👋 Good Morning!
Welcome to the 97 new readers who joined yesterday!
Our AI read and summarized 81 stock ideas, 1024 news articles, and 130 insider trades and found:
An investor increased their $TMDX position by 50% (featured stock idea)
Affirm stock pops (news)
A free report for the top 5 stocks for 2024 (links you’ll love)
An insider with a 100% win rate buys more stock (insider trade)
3 bonus stock ideas
and much more…
Thanks for reading! Have a great day.
Connor
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FEATURED STOCK IDEA
Increased my $TMDX position by +50%.
TransMedics Group, Inc. provides organ transplant therapy services designed to enhance the organ transplant process through its Organ Care System. This system keeps donor organs functioning outside the body, increasing their viability and expanding the geographic range of available organs.
Ticker: TMDX | Price: $77.50 | Price Target: $155 (+100%) | Timeframe: 3 years
🩺 Organ Transplant | ⬆️ Growth | 📈 Bullish Idea
I bolstered my position in $TMDX by 50%, projecting a potential double in value within three years for a base case, or two years for a bull case, equating to 25% and 40% compound annual growth rates (CAGR) respectively. The company's guidance for 2023 revenue is $225 million, yet a continuation of its recent quarter-on-quarter growth of 20% could lead to $240 million. Even with conservative estimates of 45% growth in 2024 and 30% in 2025, we could see $452 million in revenues by 2025, with the expectation of exiting the year with 30% EBIT margins, a believable target due to enhanced volume and cost synergies from their recent aviation acquisition. As we approach 2024 and market focus shifts to 2025, the stock trades at approximately 18x projected 2025 EBIT. Assuming a continuation of 30% growth into 2026 suggests a 14x earnings multiple, and even accounting for a 25% tax rate, the stock's trading at 19x its 2026 EPS seems undervalued. This, combined with the small cap and biotech sector's growth potential and the presence of significant short interest—which could fuel price surges on positive earnings surprises—supports my belief in the stock's capacity for accelerated growth and multiple expansion, making it a strong candidate for doubling in less than three years.
Read the full article here. Read time: 2 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
Amazon ($AMZN)
🟩🟩🟩⬜️⬜️ - Buy (39%)
🟥⬜️⬜️⬜️⬜️ - Pass (30%)
🟨🟨⬜️⬜️⬜️ - Watchlist (31%)
* There are more stock ideas later in the email!
MARKET OVERVIEW
Today’s market overview is brought to you by Behind the Markets. They put out a free report on a small defense contractor that could 35,960% returns after winning a groundbreaking contract. Get the free report
Are you short-term bearish or bullish? |
Yesterday’s Poll Results: 59%
If you thought it couldn’t get any more bullish, you’d be wrong! The indexes were all positive (the Russell was very positive), the Fear v Greed indexed jumped another 3 points further into “Extreme Greed”, and Yellowbrick Road readers got another 3 points more bullish.
STOCK MARKET NEWS
Today’s news is sponsored by Investors Business Daily. If you want to beat Wall Street, you need an edge––IBD Digital gives you the tools to invest with success. Try 8 weeks today for just $8.
Epic Games CEO blasts Google's $700M settlement with US states as ‘injustice to all Android users' - New York Post
FedEx shares tumble after weaker demand hits revenue outlook - CNBC
Affirm stock pops more than 15% on expanded Walmart partnership - CNBC
Investors dumped cash, bought stocks in December - BofA - Reuters
Tesla skips employees' yearly merit-based stock compensations - Bloomberg News - Reuters
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
What was the first successful product of 3M, initially set up to mine a mineral deposit for grinding-wheel abrasives? |
Yesterday's Question: Which car company was originally a manufacturer of airplane engines?
Answer: BMW! micked*** and sam.alwa*** both pointed out that BMW’s logo is an airplane propeller (which I didn’t know). Rolls Royce also made airplane engines, but that came after they started making cars.
FEATURED INSIDER TRADE
Brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
10% Owner at Mobile Infrastructure Corp ($BEEP)
The 10% Owner purchased 35,000 shares at $5.02/share ($176K total) which increased their holdings by 0.0%. The current price is $4.04 (-19.5%). (trade link)
Historic Returns
1m returns: 18% weighted | 18% median | 100% win rate (2/2)
3m returns: 47% weighted | 47% median | 100% win rate (2/2)
6m returns: 54% weighted | 54% median | 100% win rate (2/2)
1y returns: 12% weighted | 12% median | 100% win rate (2/2)
LINKS YOU’LL LOVE
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+15 POINTS - WEEKLY TOURNAMENT
Louis Navellier is one of America's top Money Managers, with over $1 billion under management. Get his free report on the top 5 picks for 2024*
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SECRET QUESTION
+10 POINTS - WEEKLY TOURNAMENT
If you read this far, reply to this email with your answer to gain points for the weekly tournament. (Or if you’d rather not answer but still want the points, you can just reply and say hi!)
Secret Question: Which brokerage do you use? Vanguard is my main brokerage, but I use Robinhood for options and short-term trades because it’s so easy to use
BONUS STOCK IDEAS
Short $CAVA. Insiders will start dumping
CAVA Group, Inc. owns and operates a chain of Mediterranean restaurants. The company offers salads, dips, spreads, toppings, and dressings.
Ticker: CAVA | Price: $41.02 | Price Target: N/A | Timeframe: N/A
🌯 Restaurant | 🚨 Event Driven | 📉 Bearish Idea
$CAVA the large lock-up came and went yet $CAVA has kept climbing. The current price is $42, the IPO price was $22, the close on the IPO was $43 (+99%), and a large lockup took place on the IPO. I'm betting that insiders will start dumping large blocks around $43-$46. I'm buying the April $40 Puts
Read the full article here. Read time: 1 min
ANALYST REPORT
Top online travel pick going into 2024 - $EXPE
Expedia Group, Inc. is an American online travel shopping company for consumer and small business travel. Its websites, which are primarily travel fare aggregators and travel metasearch engines, include Expedia.com, Vrbo (formerly HomeAway), Hotels.com, Hotwire.com, Orbitz, Travelocity, trivago and CarRentals.com.
Ticker: EXPE | Price: $150.26 | Price Target: N/A | Timeframe: N/A
🛩️ Travel | 💻 Online | 🏷️ Undervalued | 📈 Bullish Idea
Oppenheimer has identified Expedia ($EXPE) as their top Online Travel company heading into 2024, citing improvements from their unified tech stack and loyalty programs as key factors that are underestimated by the market. They anticipate efficiencies from these improvements to drive direct traffic, reduce operational expenses, and achieve revenue and EBITDA compound annual growth rates (CAGRs) of 9% and 13%, respectively, from 2023 through 2025. Despite fierce competition from $BKNG and Google in the vacation rental market potentially impacting Vrbo's traffic, expected growth in lodging bookings (10% in 2024 and 8% in 2025) and stable non-lodging revenues should contribute positively. Marketing costs are estimated to remain stable relative to lodging bookings, while unification of the tech platform is predicted to generate cost savings and operational efficiencies, especially notable in gross margin expansions and overhead expense management. The utilization of AI is particularly promising in enhancing customer service efficiencies. Capital wise, EXPE is poised to invest $3.3 billion in stock repurchases over the next two years, reducing share count by 6%, and retire $1 billion in debt, targeting a net-debt ratio of 2x by 2025. Valuation looks attractive at 9.5x their projected 2024 EBITDA, a discount compared to its pre-pandemic range of 10x-12x.
Read the full article here. Read time: 2 min
Free optionality with upside
Roivant Sciences is a biopharmaceutical company that focuses on applying technology to drug development, has a diverse range of assets, and is involved in high-profile deals within the biotech industry.
Ticker: ROIV | Price: $10.91 | Price Target: $15+ (+37%) | Timeframe: N/A
🧪 Biotech | 🚨 Event Driven | 📈 Bullish Idea
Roivant Sciences ($ROIV) is an enticing biotech investment poised to receive a $7.25 billion windfall from Roche for their Telavant project, leaving Roivant with an estimated $7 billion cash reserve or $8.05 per share. Additionally, Roivant's 57% stake in Immunovant ($IMVT) is worth roughly $3.5 billion, translating to another $12 per share. Despite these assets, $ROIV's shares are trading around $10, effectively ignoring the value of their other ventures. The company may return $1-2 billion to shareholders, reflecting strong capital management. Given $IMVT's prospects and the potential $5-10 per share value from LNP litigation over COVID vaccine royalties, and the promise of approved drug Vtama and phase 3 Brepocitinib, a conservative estimate suggests a 50% upside to $15 share, whereas favorable outcomes could propel the value to over $24 per share. The current market drastically undervalues Roivant's diverse and potentially lucrative portfolio.
Read the full article here. Read time: 2 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Medical Facilities Corp ($DR.TO) [46%]
🟨🟨⬜️⬜️⬜️ Tiptree Inc ($TIPT) [29%]
🟥⬜️⬜️⬜️⬜️ Natural Gas Services ($NGS) [25%]
Your Thoughts:
🩺 steveng.*** ($DR.TO): There is consolidation going on in the REIT arena. Peak just merged with another medical facility real estate holder
🛢️ alpo*** ($NGS): Picks & shovels. Increasing exports by NG carriers should bring US prices closer to world prices
🛢️ patrick*** ($NGS): STRONG BUY
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WEEKLY TOURNAMENT
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🏆 This Week’s Leaderboard
w3lco**** (79 points)
jeffr*** (79 points)
mwill**** (79 points)
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+3 POINTS - WEEKLY TOURNAMENT
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