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Top stock ideas (Thur, Nov 30)
Connor Van Ooyen
November 30, 2023
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👋 Good Morning!
Welcome to the 112 new readers who joined yesterday!
Our AI read and summarized 94 stock ideas, 1031 news articles, and 63 insider trades and found:
Morningstar analyst gives $PDD a 50% upside after impressive Temu numbers (featured stock idea)
US GDP grew faster than expected (news)
A CEO at $PANW sold 27% of his holdings (insider trade)
3 more bonus stock ideas
and much more…
We are getting close to the weekend and the weather is warming (for me at least)! 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
ANALYST REPORT
PDD Holdings: Incorporation of Temu Into Our Valuation Leads to 82% Rise in Our Fair Value
PDD Holdings (Nasdaq: PDD) is a multinational commerce group that owns and operates a portfolio of businesses. PDD Holdings aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities.
Ticker: PDD | Price: $141.73 | Price Target: $213 (+50%) | Timeframe: N/A
💻 Online Services | 📦 E-commerce | 🇨🇳 China | 📈 Bullish Idea
PDD Holdings' third-quarter results exceeded expectations, leading to an 18% jump in share price, with 94% revenue growth and a 47% increase in non-GAAP operating income. The fair value estimate for PDD increased significantly to USD 213 from USD 117, factoring in the overseas platform Temu into the valuation. PDD’s 5-year revenue CAGR is now estimated at 36%, up from 21%, and non-GAAP operating income CAGR at 21%, up from 16%. Temu is projected to grow at a CAGR of 55% from 2023-28 with operating profit turning positive by 2028. PDD's domestic business, Pinduoduo, is expected to maintain its current operating margin. Challenges for Temu include potential U.S. bans and competition from e-commerce companies like Shein and AliExpress, leading to a Very High Morningstar Uncertainty Rating for PDD. Despite this, PDD shares are considered undervalued, well-positioned amid value-for-money consumption trends in China and projected to benefit from Temu's long-term growth. PDD’s strategy includes promoting agricultural products and groceries, with a focus on increasing average revenue per user and expanding its ecosystem. The company leverages its social e-commerce platform and Tencent's social network for user acquisition, aiming to capture a larger market share and diversify its product range. Despite competitive threats and regulatory uncertainties, PDD’s network effect and efficient capital allocation, especially in agricultural e-commerce and technology, are expected to support its long-term profitability and growth.
Read the full article here. Read time: 8 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
Monday.com ($MNDY)
🟩🟩🟩⬜️⬜️ - Buy (39%)
🟥🟥⬜️⬜️⬜️ - Pass (36%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (25%)
emoj**** (buy) - With Microsoft Project really its only competitor, and its cloud-based versatility, mobility, and security, MNDY is poised to quickly adapt in the Agile development/project marketplace
* 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: 57%
The large-cap indexes were slightly down while the small-cap index continues to do its own thing and was up 0.61% on the day. The CNN Fear v Greed index dropped by 1 point, the news sentiment fell to 0.273 (below the weekly average of 0.351), and Yellowbrick Road readers stayed exactly as bullish as yesterday at 57%. emoj*** points out that investors remain bullish as economic data is looking better than expected and investors are expecting rate cuts early next year.
STOCK MARKET NEWS
Today’s news is brought to you by Your Next Breakthrough. Get one idea, one question, and one exercise each week that could spark your next personal breakthrough. Subscribe here or learn more.
U.S. GDP grew at a 5.2% rate in the third quarter, even stronger than first indicated - CNBC
Okta hackers stole data on all customer support users, company says - CNBC
GM to buy back $10 billion in shares, cut Cruise spending - Reuters
Blackstone paying $2.3 billion to acquire Rover - Fox Business
There They Go Again: GameStop (GME) Stock Soars - 24/7 Wall Street
* 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
Which company, initially created as an audio cassette manufacturer, evolved into a leading global electronics and entertainment company? |
Yesterday’s Question (link): Who is the Nobel Prize-winning economist famous for his work on 'Prospect Theory'?
Answer: Daniel Kahneman (and his partner Amos Tversky) worked on Prospect Theory which is a theory in behavioral economics that says that most people perceive the pain from losses more strongly than the pleasure from gains. For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000.
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.
The CEO at Palo Alto Networks (PANW) sold 27% of his holdings ($56M) (link)
An EVP at Nvidia ($NVDA) sold 12% of his holdings ($19.2M) (link)
A Director at United Bancorp sold 49% of their holdings for $200k (link)
A Director at Danimer Scientific ($DNMR) increased their holdings by 29% ($93k) (link)
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
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SECRET QUESTION
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BONUS STOCK IDEAS
HEDGE FUND
[SHORT] MW is Short the Credit of CPI Property Group S.A. (CPIPGR)
CPI Property Group operates as a property investor and developer in Central Europe
Ticker: O5G.DE | Price: EUR 0.92 | Price Target: N/A | Timeframe: N/A
🏠 Property Management | 🇨🇿 Central Europe | 📉 Bearish Idea
Muddy Waters is shorting CPI Property Group (CPIPGR), a real estate company controlled by Czech billionaire Radovan Vitek, claiming Vitek has brazenly looted the company of over €150 million through four examined transactions, including an undisclosed related party deal and asset round-tripping scheme. Muddy Waters believes its findings likely indicate pervasive issues beyond those identified explicit transactions, with nearly 50% of the €1.2 billion in deals reviewed deemed suspicious. The report accuses Vitek of using proxies to obscure self-dealing, manipulating subsidiaries' financials, making unnecessary retroactive price adjustments to extract more cash, and financing personal expenses like a luxury yacht through CPIPG's books. With flawed governance and accounts that seem "haphazard at best," Muddy Waters argues CPIPG's assets and cash accounts are likely overstated from systematic looting and investors drastically overpaying for the business.
Read the full article here. Read time: 35 min
HEDGE FUND
Deep Sail Capital: Creative Realities (CREX)
Creative Realities provides digital marketing technology and solutions in the United States and internationally.
Ticker: CREX | Price: 1.93 | Price Target: N/A | Timeframe: N/A
🪧 Digital Signage | 🔄 Business Model Shift | 📈 Bullish Idea
Creative Realities, a digital signage installer and software operator, has enhanced its digital signage software offerings through the acquisitions of Reflect Systems in 2022 and Allure in 2019. The company provides software solutions like ReflectView, Clarity, and Reflect AdLogic, which were traditionally sold only with their installed screens. However, they are now expanding into channel sales, allowing other installers to offer their software. This shift could be transformative due to the higher gross margins on software sales (about 70–80%) compared to their hardware sales (around 40%). Creative Realities' SaaS business currently has an annual recurring revenue (ARR) of $15.2 million, with expectations of growth as new installations occur. Approximately 5% of installation spend converts to increased software ARR, projecting their ARR to exceed $20 million annually after delivering $120 million of backlog installations over the next two years. Additionally, there are opportunities to expand average revenue per user (ARPU) per installed display through content design, ad delivery, and interactive functionality.
Read the full article here. Read time: 6 min
HEDGE FUND
Gehlen Brautigam Capital: Anima Holding
Anima Holding S.p.A. is a publicly owned investment manager. The firm invests in the public equity markets of Italy.
Ticker: ANIM.MA | Price: EUR 3.93 | Price Target: N/A | Timeframe: N/A
🏦 Asset Manager | 💰 7% Dividend | 🇮🇹 Italy
Anima Holding SpA, the largest independent Italian asset manager with EUR 184bn in assets under management, benefits from exceptional long-term distribution agreements with major Italian banks like Banco BPM and Banca Monte dei Paschi di Siena, extending up to 2037. These agreements, uncommonly favorable for a third-party manager, were secured through acquisitions of captive bank asset managers. Anima's position as the largest independent Italian asset manager makes it a favorable candidate for future acquisitions from banks wanting to divest their asset management arms. The company is highly cost-efficient, boasting an EBIT margin of 70-75% and a cost-income ratio of around 25%. Purchased at EUR 3.30 per share, Anima traded at less than 5x current year's EBIT and around 7.5x Free Cash Flow (FCF), offering a very recurring earnings stream and nearly 7% dividend yield. The firm also engages in significant share buybacks. Despite a 20% increase in share price since purchase, Anima's valuation remains attractive. Predominantly focused on fixed-income, its products are now more appealing in the current higher interest rate environment, potentially leading to increased investment returns, inflows, and reduced fee pressure, setting the stage for Anima to return to mid- to high-single-digit growth rates.
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):
🟩🟩🟩⬜️⬜️ Jet2 ($JET2.L) [41%]
🟨🟨⬜️⬜️⬜️ AssetCo ($ASTO.L) [33%]
🟥⬜️⬜️⬜️⬜️ [SHORT] Microvast ($MVST) [26%]
WEEKLY TOURNAMENT
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🏆 This Week’s Leaderboard
fri.**** (145 points)
jean*** (145 points)
bucl**** (145 points)
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