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- Top stock ideas (Fri, Dec 22)
Top stock ideas (Fri, Dec 22)
Connor Van Ooyen
December 22, 2023
YBR Portfolio // About // Sponsorships // Twitter // Upgrade
👋 Good Morning!
Welcome to the 92 new readers who joined yesterday!
Our AI read and summarized 87 stock ideas, 914 news articles, and 103 insider trades and found:
A solar company with 80% upside (featured stock idea)
Nike gets crushed after earnings (news)
3 steel executives sell millions in stock (insider trade)
A digital signage company with 100%+ upside, gene therapy company with potential, an enterprise SaaS company in Brazil with nearly 80% upside (bonus stock ideas)
and much more…
Thanks for reading! Have a great day.
Connor
* If you missed yesterday’s email, don’t forget to read it here
Premium members can see all of the exclusive stock ideas on Discord (and the Yellowbrick Road Premium Portfolio) and the updated Yellowbrick Road Portfolio by clicking the button below.
TODAY’S SPONSOR
+15 POINTS - WEEKLY TOURNAMENT
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FEATURED STOCK IDEA
BLOG POST
Q323 Update on Altus Power AMPS
Altus is a solar asset company with a growing portfolio, reaching 863MW projected by Q4 2023. The company differentiates itself through a unique non-bank syndicated construction facility with Blackstone insurance capital, allowing it to maintain higher operating margins and grow its asset base even in a high-interest rate environment.
Ticker: AMPS | Price: $6.65 | Price Target: $12 (+80%) | Timeframe: 2024
☀️ Solar | 📈 Bullish Idea
Despite a challenging interest rate climate, Altus Power continues to thrive in the solar sector, with its stock fluctuating between $4-$7 throughout most of 2023, outperforming peers like NOVA, ENPH, and SEDG. The company expanded its asset portfolio from 470MW in 2022 to 721MW by Q3 2023, with plans to reach 863MW by the year-end, marking an 83% YoY growth. Altus has retained high operating margins at 60% thanks to an innovative non-bank syndicated construction facility with Blackstone insurance capital, minimizing interest rate exposure by securing debt margins at point of sale. This financial savvy allows for substantial growth, with only 10% capital input from Altus complemented by funding from Blackstone and tax equity credits. Key developments in 2024 include strategic acquisitions to potentially increase the portfolio to 1200-1300MW, leveraging community solar in densely populated regions to enhance margins, and monetizing the AltusIQ platform. Current analyses suggest a significant undervaluation, predicting a rise to $12/share if acquisitions and corporate initiatives bear fruit, potentially bumping 2024's EBITDA to $165m. The company's low EV/EBITDA ratio contrasts with its solid 60% EBITDA margin and the recession-proof nature of its business. The author plans to double down on Altus, aiming to make it up to 30% of their portfolio if prices dip below $4.5, affirming the strength of their investment thesis and anticipates for a fruitful 2024, particularly as interest rates potentially soften.
Read the full article here. Read time: 3 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
R1 RCM Inc ($RCM)
🟩🟩🟩⬜️⬜️ - Buy (38%)
🟥🟥⬜️⬜️⬜️ - Pass (33%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (29%)
antho**** (pass) - It looks like this stock has room to go lower. Hasn't really found a floor yet, with bearish structure in place
samb**** (buy) - Presently trading around it's all time low it appears that it is poised to bounce back to about it's mid-point high of $15 - $18 in the near term buoyed by AI supported technology in its services.
* There are more stock ideas later in the email!
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 56% bullish
Well the dip lasted all of one day and the market got right back to going up. All of our indicators are slightly more bullish than yesterday (except for the indexes which are all way up): the Fear v Greed index is up 2 points, Yellowbrick Road readers are 1 point more bullish, and the news is slightly more bullish than yesterday but still a tad bit below the previous 7-days average.
Reader william.*** points out that 2024 is an election year which means there will be a push by the incumbents to keep the markets/consumers happy and the FED is signaling that it will bring down rates in 2024.
However, reader urn4*** is cautioning that prices have exceeded fundamentals.
STOCK MARKET NEWS
Nike gets crushed after hours as North America revenue lags - Seeking Alpha
US economic growth unexpectedly revised down to 4.9% in third quarter - Fox Business
Apple fails in bid to delay Apple Watch sales ban - CNBC
CarMax Stock Jumps As Earnings Top Expectations, Company Restarts Stock Buyback Program - Investopedia
Alphabet (GOOGL) Boosts Virtual Assistance With New Chatbot - Zacks Investment Research
Apple ramps up Vision Pro production, plans February launch - Bloomberg News - Reuters
Nike unveils plan to cut $2 billion in costs over three years - CNBC
Toyota shares slide 4% after vehicle recall, Daihatsu safety issues - CNBC
QUIZ
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Which famous watch company was founded by Hans Wilsdorf and Alfred Davis in London in 1905? |
Yesterday’s Question (link): Which company was founded by the inventor of the audio cassette, compact disc, and Blu-ray disc?
Answer: Philips
INSIDER TRADES
The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
3 different steel executives sold millions of dollars of stock
Pres. & CEO at UNITED STATES STEEL CORP ($X) sold 252,458 shares at $50.01/share ($12.63M total) which decreased their holdings by 30.3% (link)
Chief Operating Officer at NUCOR CORP ($NUE) sold 28,768 shares at $175.01/share ($5.03M total) which decreased their holdings by 12.5% (link)
Chair, President and CEO at NUCOR CORP ($NUE) sold 15,000 shares at $176.28/share ($2.64M total) which decreased their holdings by 9.6% (link)
LINKS YOU’LL LOVE
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The LVMH portfolio
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SECRET QUESTION
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Secret Question: What are your big Christmas weekend plans? We are heading back to our hometown for lots of family gatherings.
BONUS STOCK IDEAS
$AVRO has a low valuation and may be wrapping up strategic alternatives
Avrobio is a clinical-stage gene therapy company focused on developing potentially curative ex vivo lentiviral-based gene therapies to treat rare diseases following a single dose.
Ticker: AVRO | Price: $1.34 | Price Target: N/A | Timeframe: N/A
🧪 Biotech | 🏷️ Undervalued | 📈 Bullish Idea
I have been buying more $AVRO since the valuation is bizarrely low to me and strat alternatives could be wrapping up soon. MC < $60 M and MRQ cash $105 M. Last quarter was 'kitchen sink' to pay separation charges and terminate licenses so burn will be very low in Q4. Also let go of more employees in Oct. Market seems to assume horrible reverse merger but they removed registration statement. No value placed on assets. Seems worst case scenario of horrible reverse merger (would have to be as bad as $FIXX) is priced in and all other scenarios offer substantial upside.
Read the full article here. Read time: 1 min
HEDGE FUND
100% more upside for $CREX
Creative Realities is a provider of digital signage solutions and software, specialized in offering services including installation, digital signage management, and advertising. Following acquisitions and growth in software ARR, they focus on expanding their SaaS offerings and leveraging their high-margin software business.
Ticker: CREX | Price: $2.47 | Price Target: $5.60 (+127%) | Timeframe: N/A
🪧 Digital Signage | 💻 Enterprise SaaS | 📈 Bullish Idea
Creative Realities (CREX), a digital signage solutions firm, has made strides by integrating acquisitions like Reflect Systems (2022) and Allure (2019) to enhance their digital signage software suite, moving towards a SaaS model, with a 70-80% gross margin, much higher than the 40% from hardware installations. With an ARR of $15.2 million and a backlog of $120 million installation projects, CREX aims to boost ARR to over $20 million after executing these installations. Their total service solutions have attracted significant clients like Panera Bread and Starlight Media. Despite challenges, including a reverse stock split to meet NASDAQ requirements and rejecting low acquisition bids from Pegasus Capital, CREX remains focused on becoming FCF positive by Q4 2023 or Q1 2024. With a 4.4x EV/NTM EBITDA valuation and market price at $1.85, the stock is perceived as undervalued, with a target of $5.6 per share suggesting over 100% upside, contingent on project delivery and potential expansion through channel partnerships.
Read the full article here. Read time: 5 min
BLOG POST
ZENVIA INC - ZENV
Zenvia is a Brazilian enterprise offering CPaaS and SaaS solutions, operating as the Twilio/Salesforce/Zendesk of Brazil. They provide a customer experience (CX) SaaS platform that integrates seamlessly with various communication channels such as SMS, Voice, WhatsApp, and Webchat, enhanced by AI and automation tools. Zenvia serves a wide range of industries, enabling businesses to digitally interact with customers throughout the consumer journey.
Ticker: ZENV | Price: $1.18 | Price Target: $2.10 (+78%) | Timeframe: N/A
💻 Enterprise SaaS | 🇧🇷 Brazil | 📈 Bullish Idea
Zenvia Inc (ZENV), a CPaaS and SaaS provider touted as the 'Twilio/Salesforce/Zendesk of Brazil', is considered the world's cheapest enterprise software company with a revenue over $100M, trading at only 0.2x NTM Revenue and 3.3x NTM EBITDA. Despite fears of a funding gap due to substantial earn-out liabilities following its acquisitions spree, Zenvia has successfully renegotiated these obligations, extending them further. Founded 19 years ago, Zenvia expanded from a core CPaaS offering to a comprehensive CX SaaS platform, now responsible for over half of its total Gross Profit. With a Net Revenue Expansion rate ranging from 108% to 122% recently, the business model relies on subscription-based SaaS revenues and volume-based CPaaS interactions. Zenvia is positioned advantageously within the growing digital transformation landscape of Latin America, holding a leading 13% CPaaS market share. Having secured better payment terms from SMS providers and Twilio, Zenvia is producing significant Free Cash Flow, exhibiting three positive EBITDA quarters, and seeing a shift towards the higher-margin SaaS business. The anticipated resolution of the funding gap, increasing gross margins, and strong market position in CPaaS and SaaS sectors support projections of a revenue growth of 15%-20% and an EBITDA margin expansion to 18.5% by 2027. Zenvia's stock has considerable upside potential, with estimated IRRs ranging from 95% to 123% if it can maintain its operational momentum and resolve its funding concerns.
Read the full article here. Read time: 8 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ ENVX ($ENVX) [37%]
🟨🟨⬜️⬜️⬜️ Texas Instruments ($TXN) [34%]
🟥⬜️⬜️⬜️⬜️ Newmont ($NEM) [29%]
Your Thoughts:
⚡️ emoj*** ($TXN): Effectively adapting and adjusting for the long game.
⚡️ micked*** ($TXN): Texas Instruments has carved out a unique niche that is necessary in today's economy.
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WEEKLY TOURNAMENT
Gain points and earn prizes every week just for voting on the quizzes/polls, replying to this email, and clicking on ads/sponsored links!
🏆 This Week’s Leaderboard
alin.mu**** (156 points)
stokes*** (156 points)
alpo**** (156 points)
Scoring
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+10 points for replying to this email
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+50 points for referring a friend
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Connor (@connorvo on Twitter)
How would you rate today's newsletter?If you vote 1 or 3 stars, please leave a comment with what you didn't like so I can improve it! |
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