Top stock ideas (Mon, Feb 26)

Connor Van Ooyen
February 26, 2024

YBR Portfolio // About // Sponsor YBR // YBR Premium

👋 Good Morning!

No email tomorrow. I’m traveling tomorrow so there won’t be a morning email.

This is the Yellowbrick Road where I share the best stock ideas from billion-dollar hedge funds, professional analysts, millionaire investors, and more!

Welcome to the 107 new readers who joined over the weekend!

Our AI read and summarized 168 stock ideas, 876 news articles, and 274 insider trades and found:

White Falcon Capital pitches Franco-Nevada Corporation (featured stock idea)
Baron Technology Fund pitches $MU, the Ayvakit drug could be huge for $BPMC, and $AMZN is JP Morgan’s top pick (bonus stock ideas)
Google pauses Gemini AI image generator (news)
A director with 45% returns bought stock (insider trade)
and much more…

Thanks for reading! Have a great day.

Connor

* If you missed yesterday’s email, don’t forget to read it here

FEATURED STOCK IDEA

FUND LETTER

White Falcon Capital: Franco-Nevada Corporation - $FNV

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in Latin America, the United States, Canada, and internationally. It operates through Mining and Energy segments.

Ticker: FNV | Price: $107.72 | Price Target: $185.44 (+72%)
Market Cap: $21B | Timeframe: 3 years

💸 Metals Royalty | 💰 1.3% Dividend | 📈 Bullish Idea

This pitch comes from the Idea Brunch newsletter, the weekly newsletter where professional investors shares a couple of their stock pitches (it’s where this pitch is from). They are offering Yellowbrick Road readers a 20% discount for life (link).

Franco-Nevada Corporation (NYSE: FNV - $21.0 billion market cap) is the top precious metals royalty company, recognized for its strong business model where it finances mining projects in exchange for a share of the output, delivering a formidable growth stock despite its high valuation. Its leading asset was the Cobre Panama mine, worth approximately $2 billion in net asset value and 22% of Franco-Nevada's revenue. Political turmoil in Panama led to a shutdown that erased $6 billion from Franco-Nevada's valuation, an overreaction given that legal arbitration could restore operations and potentially boost FNV's stock price by $50 per share. Even without Cobre Panama, Franco-Nevada's diverse portfolio of 432 royalties is projected to grow 8-10% annually. Over three years, this growth combined with a potential Cobre Panama restart could yield a 70% return—40% from the mine and 30% from the rest of the portfolio. Additionally, in a volatile macroeconomic climate with gold prices remaining above $2,000/ounce, these returns might come sooner, presenting a compelling investment case for Franco-Nevada.

Read the full article here. Read time: 2 min

+3 POINTS - WEEKLY TOURNAMENT

How do you rate the featured stock idea?

Yesterday’s Featured Stock Idea

Hilton Grand Vacations Inc. ($HGV)

🟩🟩🟩⬜️⬜️ - Buy (48%)
🟥🟥⬜️⬜️⬜️ - Pass (32%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (20%)

There are 3 more stock ideas after “Today’s Sponsor”

TODAY’S SPONSOR

+15 POINTS - WEEKLY TOURNAMENT

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BONUS STOCK IDEAS

FUND LETTER

Baron Technology Fund Portfolio Holding - Micron Technology Inc.

Micron Technology, Inc. designs, develops, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit.

Ticker: MU | Price: $86.00 | Price Target: N/A
Market Cap: $89B | Timeframe: N/A

⚡️ Semiconductor | 📈 Bullish Idea

We have begun investing in Micron Technology, Inc. (ticker: MU), a leading manufacturer of DRAM and NAND memory chips, tapping into the robust growth of the industry, especially in the crucial high bandwidth memory (HBM) sector crucial for AI chipsets. Micron stands to gain market share with its superior HBM technology as HBM production naturally curbs DRAM supply, potentially leading to beneficial pricing stabilization. The company's cutting-edge 11β DRAM process sets it apart with increased density, faster data transfer, and better power efficiency, which are essential for AI applications, as they enable more efficient large language model training and cost savings for AI-driven data centers. Micron’s blend of technological advantages and strategic market placement makes it an attractive investment, especially with the rising importance of AI infrastructure.

Read the full article here. Read time: 1 min

BLOG POST

Blueprint Medicines: Ayvakit Revenue Surge Fuels Optimism (Rating Upgrade)

Blueprint Medicines Corporation, a precision therapy company, develops medicines for genomically defined cancers and blood disorders in the United States and internationally.

Ticker: BPMC | Price: $89.49 | Price Target: N/A
Market Cap: $5.5B | Timeframe: N/A

🧪 Biotech | 📈 Bullish Idea

Blueprint Medicines Corporation (NASDAQ: BPMC) has experienced a 64% stock increase since a prior 'buy' recommendation. Its flagship product, Ayvakit, is gaining traction in the indolent systemic mastocytosis (ISM) market, with revised peak annual revenue estimates of $2 billion—up from $1.5 billion. Ayvakit's sales in 2023 totaled $204.2 million, with projections between $360 million and $390 million for 2024. Ayvakit, which treats a fundamental cause of ISM, is deemed to have blockbuster potential. Q4 earnings reported a rise in net product revenue to $71 million year-over-year, and the company, valued at an enterprise value of $5.5 billion, anticipates continued growth. Despite high R&D and SG&A expenses resulting in a net loss, Blueprint's strong balance sheet shows $710.6 million in liquid assets against $214.9 million in total current liabilities, yielding a current ratio of 3.76 and a cash runway of approximately 19.5 months. Market sentiment is positive, with BPMC's market cap at $5.53 billion and projected revenue growth. Institutional and insider trades signal active interest. Considering Ayvakit's market success and the company’s financial robustness despite high burn rates and potential need for future financing, the stock recommendation is upgraded to a 'strong buy' due to its promising outlook for 2024 and beyond.

Read the full article here. Read time: 4 min

ANALYST REPORT

JP Morgan's Top Investment Idea: Amazon's Dominance in US E-commerce Continues

Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS).

Ticker: AMZN | Price: $174.99 | Price Target: N/A
Market Cap: $1.75T | Timeframe: N/A

📦 Ecommerce | 💻 Web Services | 📈 Bullish Idea

In the fourth quarter, we estimate that Amazon's share of US e-commerce increased by 272 basis points year-over-year to reach 46.4%, marking the sixth consecutive quarter of year-over-year share gains exceeding 100 basis points. Looking ahead to 2024, we anticipate Amazon's US Gross Merchandise Value (excluding Physical Stores) to grow by 12.0% year-over-year, compared to 12.6% in 2023, with Amazon capturing an additional 160 basis points year-over-year share of US e-commerce. We project that Amazon's total retail revenue growth will remain stable, staying above 10%, buoyed by ongoing strength in third-party sales, accelerated first-party growth, expanded same-day and one-day delivery options, increased spending by Prime members, and advancements in under-penetrated verticals. Amazon continues to be our top investment idea, as we maintain our belief that the penetration of US e-commerce into adjusted retail sales could potentially double from approximately 22% in 2023 to over 40% in the long term.

Read the full article here. Read time: 1 min

+3 POINTS - WEEKLY TOURNAMENT

Which bonus stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Duke Energy ($DUK) [41%]

🟨🟨⬜️⬜️⬜️ Lifecore ($CVGW) [39%]

🟥⬜️⬜️⬜️⬜️ Calavo Growers ($MSTR) [20%]

Your comments:

⚡️ papap***, alpo*** ($DUK): Regulated, therefore guaranteed profitable, utilities are attractive.
⚡️ steve*** ($DUK): Duke has been a great investmestment for many years. They are well managed and service a fast growing area of the country

MARKET OVERVIEW

The Market Overview is powered by Koyfin (link). Koyfin is my personal Bloomberg terminal that doesn’t cost $2,000/month. It has all of the news, financials, watchlists, screeners, charts, etc that I need to be an informed investor. *I’ve partnered with them to give you a 20% discount if you use my link!

Are you short-term bullish or bearish on the market?

Yesterday’s Poll Results: 76% bullish

The market cooled off slightly to end the week after a couple of super bullish days. The indexes finished fairly flat with the Nasdaq slightly down and the other three slightly up. The Fear v Greed index stayed at a 78, the news index slightly fell but is still above the 7-day average, and Yellowbrick Road readers were a couple of points less bullish.

STOCK MARKET NEWS

Google pauses Gemini AI image generator after it created inaccurate historical pictures - CNBC

Ticketmaster parent Live Nation beats revenue estimates on strong concert demand - Reuters

Reddit's public debut could mean big bucks for OpenAI CEO Sam Altman - Fox Business

JPMorgan CEO Jamie Dimon sells $150M of stock in nation's largest bank for the first time - New York Post

Nvidia briefly surpasses $2 trillion in market cap during intraday trading - CNBC

Warner Bros. Discovery misses estimates for revenue and profit but boosts free cash flow - CNBC

FEATURED INSIDER TRADE

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The insider trade is 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

Director at AGILYSYS INC ($AGYS)

The Director purchased 300 shares at $77.62/share ($23,286.99 total) which increased their vested holdings by 0.7%. The current price is $82.03 (+5.7%). Their median purchase size is $16,348.90 and this is their 5th largest purchase out of 12 all time. (trade link)

QUIZ

+3 POINTS - WEEKLY TOURNAMENT

This month’s quiz questions focus on the legendary rise and fall of Long-Term Capital Management which Roger Lowenstein chronicles in his awesome book: When Genius Failed.

An in-depth guide/summary of this book is available on Shortform (a free trial and 20% off using my link!). Shortform has summaries/guides for 1000s of nonfiction books and even connects ideas between books. It’s one of my favorite tools for learning

Following the collapse of LTCM, what significant change occurred in the hedge fund industry and financial regulation?

Yesterday’s Question: What key lesson was highlighted by the collapse of LTCM, as emphasized in 'When Genius Failed'?

Answer: One of the key lessons from the collapse of LTCM, as illustrated in 'When Genius Failed,' is the danger of excessive leverage and the limitations of relying too heavily on mathematical models in finance. Their models weren’t ready to handle unforeseen future events.

LINKS YOU’LL LOVE

Coca-Cola: "A cure for all nervous affections". How cocaine, the "patent medicine" industry and mass advertising created the world's most iconic beverage.

If You Don't Know What Game You're Playing, You've Already Lost

Top insider trades from last week

Use my link for 20% off Koyfin if you want to make cool charts like this when doing research on a company

ONE OF MY FAVORITE TOOLS

💰 CEO Watcher found 2 stocks that popped over 30% just last week

CEO Watcher is a free, weekly email that I write. It includes the top insider trades that are most likely to make money. The secret sauce is that I calculate the historical returns for every insider to know which insiders buy their own stock before it pops so that we can copy their trades.

A killer week last week for CEO Watcher Premium (the paid version of CEO Watcher where you get a daily email with the top insider trades). We highlighted seven “top purchases” last week and two of them are already up over 30%.

In Wednesday’s email, I found that three directors at $IOVA with great returns bought the stock. The stock was $12.03 and is already up to $16.30 (+35%).

Then the very next day, I found a 10% Owner that made their second largest purchase. The price was $33.71 and is already up to $48 right now (+42%).

Sign up for CEO Watcher for free and upgrade to CEO Watcher Premium to get the top insider trades as soon as they happen.

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: How was your weekend? Been a little warmer than I would’ve liked for snowboarding this weekend, but still a great time!

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!

🏆 Last Week’s Winners

🥇 Prize - $25 Amazon gift card to mkant***

🥈 Prizes - $10 Amazon gift cards to szyguy*** and aiden.***

🥉 Prizes - $5 Amazon gift cards to timga***, osklr***, and jk17***

Scoring

+3 points for voting in each poll
+10 points for replying to this email
+15 points for clicking on an ad/sponsored link
+50 points for referring a friend

* Learn more about the Weekly Tournament here

MY OTHER FREE NEWSLETTERS

CEO Watcher (link): I 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.

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® (written by my friend)

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THAT’S ALL FOLKS

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