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- 🤖📈 Today's Top Trade Ideas (August 16)
🤖📈 Today's Top Trade Ideas (August 16)
285% upside potential for OneWater Marine, an analyst isn't concerned about $TSMC, and more...
👋 Hello!
Welcome to the 1,321 new Yellowbrick Road readers who joined since the last issue.
📢 ANNOUNCEMENT - MUST READ
Hey all! I’ve made a big change to the email.
I’ve decided to make the email totally free (including all of the premium trade ideas) and support it with ads instead of a premium subscription. So that means there will be at least 6 trade ideas in every email and they will all be free, including the “premium” ones that cost me money to get (like analyst reports and hedge fund letters). For everyone that was a premium subscriber, I canceled your subscription and refunded any money you have paid.
As you know if you’ve read my About Me page (link), I spend many $1000s/month on all the APIs, stock data, and AI tools I use to write my newsletters. Putting ads in the email will help me pay for these.
To help support me and this newsletter, please click on the ads and check out their products/services (and sign up for them if you are able).
Thank you so much for reading and supporting me!
Connor
Our AI read and summarized 182 articles today from all over the internet to find the best trade ideas to help you make more money in the stock market.
What you’ll find in this email:
🛥️ 285% upside potential for OneWater Marine
📈 The top stock market news headlines
[Quiz] What nickname was given to the technology stocks during the 1960s bull market that referred to their solid "blue-chip" credibility and stability?
🌳 Greenlight Capital is concerned about the market and adding hedges
More trade reasons at the end of the email, so read the whole thing!
*If you missed yesterday’s email, you can read it here
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💰 Today’s Featured Trade Ideas
The three best trade ideas our AI tool found today. Make sure to vote on your favorite!
🥇 [Blog Post] OneWater Marine One Pager (link)
Ticker: $ONEW | Current Price: $27 | Price Target: $104 (+285%)
🛥️ Boat Dealer | 🤝 Acquisitions | 🏷️ Undervalued | 📈 Bullish Idea
OneWater Marine Inc. is a local boat dealer and distributor of marine parts, holding 3% of the market with significant room for expansion. The author conservatively believes than $ONEW’s market cap could nearly 4x over the next 5 years with room for more upside. Although the boating industry faced supply chain disruptions and a spike in demand during the pandemic, resulting in increased boat prices, there has been a subsequent drop in prices and volumes due to resolving supply chain issues and waning demand. This has impacted OneWater's margins and caused an uptick in its financing rates. However, distinct from its peers, OneWater focuses on consolidation, having completed over 20 acquisitions since 2014, demonstrating consistent growth across revenue, EBITDA, and other key financial metrics. Its capital-efficient model, with diverse revenue streams, especially high-margin services and finance, positions it well. Moreover, their strategic expansion into marine parts distribution and a dominant presence in the Southeastern U.S. enhances their market positioning. While the company's strategy to buy dealerships at 4x EBITDA and double that within two years is promising, potential risks include a short-term decline in the boating industry and challenges in ongoing acquisitions. Nonetheless, the author is bullish on OneWater's long-term prospects, emphasizing the company's unmatched ability to secure dealerships at competitive prices and believing that the market undervalues its potential for industry consolidation.
Click here to read the full article
🥈 [Analyst Report] PDD Holdings: Managed Finances Well Despite Temu’s Expansion; China Outlook Upbeat This Year (link)
Ticker: $PDD | Current Price: $76.50 | Price Target: $105 (+37%)
🇨🇳 China | 📦 E-commerce | ⬆️ Growth | 📈 Bullish Idea
PDD Holdings, a leading social e-commerce platform focused on lower-tier cities in China, is rated a buy by Chelsey Tam who has a bullish $105 price target. Tam argues PDD is well-positioned to continue growing at a 10% GMV CAGR over the next decade given its massive user base of 882 million and early mover advantage in leveraging social contacts for team purchases. Key growth drivers are expansion in agriculture, where PDD is investing heavily, and increased monetization from current 3.8% to 4.6% by 2032. Bears point to competitive threats from Alibaba and live streaming e-commerce platforms like Douyin. However, Tam believes PDD can leverage its social commerce innovation and agriculture initiatives to gain share. Profitability should also substantially increase, with EBITDA margins projected to reach 34% by 2032, driven by operating leverage as PDD scales and reduces marketing expenses. Tam sees PDD's network effect, agricultural focus, and early mover advantage enabling it to capitalize on underpenetrated e-commerce demand in lower-tier cities.
Click here to read the full article
🥉 [Seeking Alpha] Viemed Healthcare: Qualified Growth Company, HMP Transaction Accretive To Value (link)
Ticker: $VMD | Current Price: $8.21 | Price Target: $13 (+58%)
🩺 Healthcare | 🏥 Medical Equipment | 🏷️ Undervalued | 📈 Bullish Idea
Viemed Healthcare, Inc. (NASDAQ:VMD), a provider of in-home medical equipment and post-acute respiratory healthcare services, has seen its stock pull back by about 20% following a significant rally in 2022. The author asserts that Viemed's fundamental economic prospects remain robust and notes the potential $28mm addition to its top line due to the HMP acquisition. This acquisition not only expands VMD's geographical presence but also complements its core strengths, especially in sleep and ventilation markets. Furthermore, this merger should pave the way for new revenue synergies and offers the company cross-selling opportunities. Viemed's recent Q2 earnings showcased a notable 31% YoY sales increase, and forecasts suggest a 35% growth in sales for the upcoming fiscal year. The company's financial health is evident from its efficient capital utilization, high invested capital turnover, and consistent profit growth, which underscores its capital efficiency. Nevertheless, there are inherent risks tied to its capital-centric profit strategy and below-average pricing model. Despite these risks, the author firmly believes that VMD is undervalued, pointing to its discounted earnings and EBITDA multiples compared to the sector. Based on their analysis, the author maintains a target price range of $13-$17/share for VMD by FY'25 and concludes by reaffirming their bullish stance on the stock.
Click here to read the full article
Which featured trade idea is the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Apple ($AAPL) [53%]
🟨🟨⬜️⬜️⬜️ PENN Entertainment ($PENN) [43%]
🟥⬜️⬜️⬜️⬜️ Rightmove ($RTMVY) [6%]
Your Thoughts:
🎰 chr*** ($PENN): The 10-year deal with ESPN is a big long-term value driver for me
📱 gus*** ($AAPL): The services revenue is exploding and super high margin. Slowing hardware sales would actually make Apple’s margins better which prevents a lot of downside.
Keep reading until the end of the email for the rest of the trade reasons!
📈 Today’s Top Stock Market News
A few of the top stock market news headlines for today from our free Market Mornings newsletter (link). Sign up for Market Mornings (link) to get all of the most important stock market news every morning.
Fitch warns of potential downgrade to multiple major US banks, triggering drop in US bank stocks - CNBC
Tesla introduces more affordable Model S and X options with reduced driving ranges in the US - NY Post
Intel cancels $5.4 billion Tower Semiconductor acquisition deal amid regulatory approval failure. - CNBC
Read all of today’s most important stock news in my Market Mornings’ newsletter (link)
🤔 Stock Market Quiz
What nickname was given to the technology stocks during the 1960s bull market that referred to their solid "blue-chip" credibility and stability? |
Yesterday’s Question (link): Which U.S. President signed the Securities Act and the Securities Exchange Act into law, resulting in the creation of the SEC (Securities and Exchange Commission)?
Answer: FDR (55% of readers got it correct. Better than I would’ve expected!)
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📈 More Trade Ideas
Other awesome trade ideas we found today.
[Hedge Fund] Greenlight Capital adds index hedges as concerns about the market increase (link)
Ticker: N/A | Current Price: N/A | Price Target: N/A
💰 Index Fund Hedges | ⬆️ Inflation | 📉 Bearish Idea
The author discusses their decision to add substantial portfolio protection through index hedges late in the quarter, shifting their stance from initially 'bearish' to 'neutral', and now to 'worried'. Their concern stems from the March event where authorities bailed out bank depositors, leading to bullish implications for stocks, as evidenced by the S&P 500's subsequent rise. While the bullish sentiment for inflation has yet to materialize, the author believes that the market is underestimating the persistence of inflation. Despite the economy's robust performance and favorable factors like strong employment, growing wages, and historically loose U.S. fiscal policy, there are looming concerns. Specifically, large deficits, coupled with the Fed's reduction in Treasury holdings, pose a question about the Treasury market's sustainability. The author warns that a resurgence in inflation and a rise in interest rates could challenge the prevailing bullish narrative. Given these potential disruptions, they have reduced their net exposure by implementing index hedges.
Click here to read the full article
[Analyst Report] Taiwan Semiconductor: Flurry of Bad News Does Not Change our Long-Term Bullishness (link)
Ticker: $TSMC | Current Price: $92 | Price Target: $137 (+49%)
⚡️ Semiconductor | 🇹🇼 Taiwan | 📈 Bullish Idea
TSMC is the world's largest semiconductor foundry. Analyst Phelix Lee maintains a bullish view on TSMC stock with a fair value estimate of $137 per share. Lee believes TSMC will benefit from long-term growth in high performance computing and artificial intelligence, which will drive continued leading-edge investments. Bears point to potential market share loss, pricing pressure, and competitive threats from Samsung and Intel. However, Lee argues TSMC's wide economic moat stemming from process technology leadership enables it to consistently earn higher margins than peers. TSMC should see revenue growth around 10% over the next 5 years as more customers adopt advanced nodes like 3nm and 2nm for uses like AI and data centers. Lee also sees TSMC's exemplary capital allocation supporting growth while allowing dividends to rise. Overall, Lee believes TSMC's competitive advantages position it to continue gaining share in high-end foundry processes.
Click here to read the full article
[Seeking Alpha] Madison Square Garden Sports For The Win (link)
Ticker: $MSGS | Current Price: $207.90 | Price Target: $400 (+92%)
🎥 Entertainment/Media | 🏀 Sports Teams | 🏷️ Undervalued | 📈 Bullish Idea
Madison Square Garden Sports (MSGS) owns prestigious sports franchises including the New York Knicks and New York Rangers. The author believes MSGS is significantly undervalued, trading at a 50%+ discount to the estimated $10 billion+ combined value of just the Knicks and Rangers franchises. He argues sports teams have historically grown in value exponentially, far outpacing inflation, with huge demand from billionaire buyers competing in bidding wars. For example, the LA Clippers sold for $2B when valued at only $575M. The author sees the same dynamics playing out if the Knicks and Rangers were sold. The author believes MSGS could fetch $12-15B for the Knicks and Rangers in a sale given their status as the #2 most valuable NBA and NHL teams. With MSGS around a $4.9B market cap, this represents massive upside even at the conservative $10B estimate. Risks include league lockouts, player strikes, and recession. But the author views MSGS as a long-term value play, looking to build a position before earnings. Between the potential teams sale catalyst and upside from minor league & eSports assets, he sees over 50% upside for MSGS stock at current levels.
Click here to read the full article
[Seeking Alpha] Datadog's AI-Powered Evolution: Bridging Observability To Automated Remediation (link)
Ticker: $DDOG | Current Price: $89 | Price Target: $124 (+39%)
🔒 Security | ☁️ Cloud | 🤖 AI | 💻 SaaS | 📈 Bullish Idea
Datadog (DDOG) is a fast-growing SaaS company providing observability and security platforms for cloud applications. The author believes AI adoption positions Datadog for significant growth by transforming it from an observability platform into one focused on automated correction. Datadog's massive datasets make it well-suited to leverage AI and machine learning to enhance its offerings. The company already invests heavily in new products and R&D. Bears note competitive threats and potential cloud spending slowdowns. However, the author believes Datadog can grow sales around 25-30% annually with room to expand operating margins to 30%. He estimates fair value of $124 per share based on a DCF model, representing major upside. The author sees Datadog as a top AI play thanks to its extensive infrastructure data well-suited for machine learning. He believes Datadog can evolve into a sophisticated automation platform leveraging AI, moving beyond just observability. Recent results showed 25% sales growth but macro concerns slowed cloud spend. With over $2 billion in cash and trading at a discount, the author believes AI-driven digital transformation and automation opportunities give Datadog strong secular growth prospects despite risks.
Click here to read the full article
Want even more trade ideas? You can see all of the trade ideas our AI tool found today by clicking the button below.
💰 Other Yellowbrick Newsletters
We write a few other stock market newsletters that you should sign up for! They’re all free :)
Market Mornings (link): The fastest way to get the top stock market news each morning. We only send the headlines, so there is no fluff, politics, etc.
CEO Watcher (link): We built a tool that tracks all insider trades AND calculates their historical returns so that we know which insider trades are worth copying. The top insider trades are sent every Friday.
[NEW!] Intentional Dollar (link): Simple thoughts, tools, and questions to help move your money forward → published weekly, for free, from a professional Financial Advisor and CFP®
How to Make Your First $1 with AI (link): Each Tuesday we send a deep dive into a new AI business idea and the step-by-step directions for building it. We have built AI tools to write some of our newsletters (like this one) and some AI investing tools (coming out soon), but we have tons of other ideas we want to share with you!
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