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Top stock ideas (Thur, Nov 16)
Connor Van Ooyen
November 16, 2023
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👋 Good Morning!
Welcome to the 131 new investors that joined yesterday! Let’s make more money in the stock market together.
Our AI tool read and summarized 143 stock ideas, 1231 news articles, and 64 insider trades today and found:
A hedge fund’s new purchase of CRH (featured stock idea)
Retail sales fall for the first time in seven months (news)
Stan Druckenmiller on taking signal from the market (links you’ll love)
A director at TKO sold $642M of stock (insider trades)
An analyst report on PUBM with 50% upside (bonus stock ideas)
and much more…
I made a few changes from yesterday (most notably, I added the bonus trade ideas back to the email and added a section for Gmail users that can’t see the whole email).
Thanks for reading! Have a great day.
Connor
* If you missed yesterday’s email, don’t forget to read it here
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FEATURED STOCK IDEA
HEDGE FUND
Voss Capital new holding: CRH
CRH plc is an international group of diversified building materials businesses whose headquarters is in Dublin, Ireland. It manufactures and supplies a wide range of products for the construction industry.
Ticker: CRH | Price: $59.11 | Price Target: $120 (+102%) | Timeframe: Late 2024
🏗️ Construction | 🏭 Manufacturing | 📈 Bullish Idea
CRH Plc, a leading aggregates and infrastructure company in the United States and Europe, has become one of our largest investments due to its minimal downside and potential for a stock rerate following its NYSE relisting. Since its formation in 1970, CRH has demonstrated a consistent 15% annual return, underpinned by disciplined operations and successful M&A activities, spending $10.3 billion on acquisitions and receiving $10.5 billion from divestitures. CRH operates four primary segments, with its Materials Solutions in North America contributing 49% to EBITDA. The company holds significant market positions in aggregates, cement, and asphalt production, benefiting from local market dynamics and stable pricing. CRH’s vertical integration enables efficient operations and customer service, offering end-to-end solutions. With 75% of its EBITDA from North America, CRH stands to benefit greatly from US government infrastructure spending programs. The recent US relisting is expected to bring the stock in line with US peer valuations. CRH trades at a competitive 11.5x P/E and 7.0x EV/EBITDA, with a projected cash generation of $35 billion over five years. Our price target for CRH is around $120 per share by late 2024, considering its operational stability, strong capital allocation, and growth prospects.
Read the full article here. Read time: 9 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured idea? |
Yesterday’s Rating (link):
Restoration Hardware ($RH)
🟩🟩⬜️⬜️⬜️ - Buy (29%)
🟥🟥🟥⬜️⬜️ - Pass (40%)
🟨🟨⬜️⬜️⬜️ - Watchlist (31%)
emoj**** (pass) - Would first need to see actual turnaround numbers from its 19% YOY losses
dana.**** (pass) - The storefronts are lovely and I want to believe that they sell quality goods, but competition is steep in that arena. Homebuilding is at an all-time low, and DIYers looking to renovate will likely choose a big box like Home Depot or Lowes... or even Etsy.
samb**** (pass) - Home buying is at a low and therefore the market for RH will lessen over the next few years. Also the rise in inflation and the reduction of buying power of essentials in the economy will impact purchase of more expensive remodeling items.
tnwo**** (watchlist) - Real Estate stagflation has always yielded higher interest in interiors and home improvement as non-investors in the sector see their current locations as a more permanent residence.
* Keep reading for more stock ideas later in the email!
MARKET OVERVIEW
Are you short-term bearish or bullish on the market?You can see how everyone else voted once you vote. |
Yesterday: 56% bullish
Yellowbrick Road readers were slightly bullish yesterday and pretty close to the Fear v Greed index (which crossed over 50% and is up another 9 points). The indexes started out super strong for the second day in a row but fizzled out as the day wore on.
Reader tnwo**** is overall bearish but believes there is short timeframe here where the market is bullish as a lot of investors are getting angsty and barreling into the market. A couple other readers (alpo**, lero***, thec***, and samb***) point out that the short-term market trend is clearly up as we enter holiday season and the lower inflation numbers.
STOCK MARKET NEWS
Today’s news is brought to you by The Hustle. The #1 news source read by entrepreneurs, CEOs, and business owners. Subscribe now or learn more
US steelmakers set for strong start to 2024 as UAW strike fuels price gains - Reuters
US helps forge global group on measuring climate-warming emissions from natural gas - Reuters
Retail sales in the U.S. fall for first time in seven months - Market Watch
Wholesale prices fell 0.5% in October for biggest monthly drop since April 2020 - CNBC Television
Disney drama builds for Bob Iger as another activist investor builds large stake - New York Post
Berkshire sheds General Motors, Procter & Gamble as it builds cash - Reuters
Cisco cuts full-year revenue forecast - Reuters
Tencent posts strong revenue growth as games sales recover - Reuters
* If you want all of the day’s most important stock market news, sign up for my free, daily email called Market Mornings.
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
Before its rise to a tech giant, which company did Larry Ellison co-found in 1977, initially named Software Development Laboratories? |
Yesterday’s Question (link): Who is known as the "Bond King" and co-founded PIMCO?
Answer: Bill Gross. He managed more money (in bonds) than anyone else in the world.
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.
A director/10% owner at TKO Group Holdings ($TKO) sold $642M (29% of their holdings) (link)
A director at Crowdstrike ($CRWD) sold $30M (65% of holdings) (link)
CFO at Crowdstrike ($CRWD) sold $7.1M (7% of holdings) (link)
CEO at T-Mobile ($TMUS) sold $5.8M (6% of holdings) (link)
Bill Ackman bought $11M of Howard Hughes Holdings (1% of holdings) (link)
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
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Click the button below to keep reading so you don’t miss the 3 bonus stock ideas!
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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: Do you ever pay attention to insider trades (like when a CEO buys/sells their own stock)?
BONUS STOCK IDEAS
BLOG POST
Mastercard: Consistent Double-Digit Growth, Still Reasonably Priced
Mastercard Inc. is the second-largest payment-processing corporation worldwide. It offers a range of payment transaction processing and other related-payment services.
Ticker: MA | Price: $396.83 | Price Target: $658.60 (+66%) | Timeframe: N/A
💳 Payment Processing | 📈 Bullish Idea
Mastercard continues to thrive with a robust growth in volume, revenue, and adjusted EBIT, demonstrating resilience amidst economic uncertainties. The share price has risen 4.4% since May, reflecting a 24% increase over the past year. The company's performance is driven by growth in low-to-mid-teens year-on-year in volume, revenue, and adjusted EBIT, with value-added services growing faster than overall revenues. Despite a 1% year-on-year decline in Q3 revenue, consumer spending remains steady, supported by strong demand in Mastercard’s Data & Services and Cyber & Intelligence solutions. The firm is exploring new account-to-account offerings like Pay-by-Bank, while adjusting to regulatory changes. Mastercard's Adjusted EBIT margin expanded due to operational leverage, and its share repurchase program continues to enhance shareholder value. With a current share price of $389.70, trading at 35.5x 2022 Adjusted EPS and 32x 2023 estimated EPS, the company is forecasted to return 69% (18.3% annualized) by the end of 2026, maintaining a BUY rating with a strong upside potential.
Read the full article here. Read time: 6 min
ANALYST REPORT
PubMatic: Increasing Volume and Some Price Stabilization Indicate Return to Growth
PubMatic is one of the leading supply-side platform providers in the digital advertising technology market.
Ticker: PUBM | Price: $15.99 | Price Target: $24 (+50%) | Timeframe: N/A
📢 Supply Side Advertising | 📈 Bullish Idea
PubMatic, a digital advertising company with no-moat, is showing resilience in the face of economic and geopolitical challenges, with the market undervaluing its potential. Despite a 1% decline in total revenue to $63.7 million in the third quarter, due to falling ad prices, there was a significant 33% increase in impressions sold. Connected Television (CTV) revenue dropped 3% amidst lower prices and high prior year growth. PubMatic's publisher base grew by 11% to 1,776, with a 19% increase in impressions per publisher. The firm is leveraging its direct relationships with advertisers and is poised for stronger revenue growth and margin expansion in 2024, leading to an increase in our fair value estimate from $22 to $24 per share. Adjusted EBITDA margin fell 10 percentage points to 29%, impacted by higher research, development, and marketing costs for new products, despite a 9% decrease in cost of sales per impression. This scenario indicates that PubMatic is set for recovery and growth, particularly with its focus on supply path optimization, connected television, retail media, and reduced advertiser hesitancy.
Read the full article here. Read time: 8 min
HEDGE FUND
Sohra Peak Capital holding: Mader Group
Mader Group Limited, a contracting company, provides specialist technical services in the mining, energy, and industrial sectors in Australia and internationally.
Ticker: MAD.AX | Price: AUD 6.33 | Price Target: N/A | Timeframe: N/A
🛠️ Mining Vehicle Repairs | 🇦🇺 Australia | 📈 Bullish Idea
Mader Group, a company specializing in mining vehicle repairs, recently hosted a tour of their offsite maintenance center in Perth, Australia, providing insights into their business operations and culture. The visit, attended by the company's CEO, Justin Nuich, and other key executives, highlighted Mader Group's strong internal culture and commitment to employee retention, partly due to their investments in proprietary technology. This technology has given Mader Group a competitive edge, as evidenced by its significant market share in Australia (over 40%) and untapped growth potential in North America, where it currently only captures 2-3% of a potentially multi-billion dollar market. The company’s unique culture and market positioning have fostered optimism about its long-term business prospects and potential for attractive returns, especially considering the vast opportunity for earnings growth in North America, estimated at 10-20 times its current annual revenue in the region.
Read the full article here. Read time: 7 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Doximity ($DOCS) [39%]
🟨🟨⬜️⬜️⬜️ Wynn ($WYNN) [33%]
🟥⬜️⬜️⬜️⬜️ Companhia Brasileira ($CBD) [28%]
Your Thoughts:
🎰 jeanp*** ($WYNN): WYNN has been in a price consolidation pattern for more than 3 years. I like it to break out sometime in 2024-26.
🎰 sight*** ($WYNN): Realistic targets for growth; dominant player in the market with deep pockets.
🎰 jkis*** ($WYNN): I've owned them in the past and made $$, best in class for Vegas I think. I'll buy.
📊 hear*** ($DOCS): Niche area, with strong appeal to its target market
🎰 pkj*** ($WYNN): Gambling pays, just not the gambler
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
emoj**** (124 points)
alpo*** (124 points)
joe_**** (124 points)
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
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): 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
+3 POINTS - WEEKLY TOURNAMENT
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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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