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Top stock ideas (Tue, Dec 19)
Connor Van Ooyen
December 19, 2023
More Stock Ideas // About // Sponsorships // Twitter // Upgrade
👋 Good Morning!
Welcome to the 101 new readers who joined yesterday!
Our AI read and summarized 93 stock ideas, 984 news articles, and 114 insider trades and found:
Analyst gives $AMZN a price target of $185 (featured stock idea)
Adobe and Figma call off merger (news)
The CEO at $HRTG bought $200k of his stock (insider trade)
A Canadian company with a 94% upside and 3.5% dividend (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
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FEATURED STOCK IDEA
ANALYST REPORT
$AMZN price target to $185 at Piper Sandler
Amazon is a multinational technology company focusing on e-commerce, cloud computing, digital streaming, artificial intelligence, and more. It is one of the largest internet companies by revenue and market capitalization.
Ticker: $AMZN | Price: $154.07 | Price Target: $185 (+20%) | Timeframe: N/A
📦 E-commerce | ☁️ Web Services | 📈 Bullish Idea
Amazon is owned in the Yellowbrick Road Premium Portfolio.
Piper Sandler has raised the price target for Amazon (AMZN) to $185, also naming it the Top Large Cap Pick. The optimism for AMZN heading into 2024 is driven by significant improvements in retail margins, and the expectation that operating income projections are still on the conservative side when considering incremental numbers. Additionally, spending on Amazon Web Services (AWS) is anticipated to accelerate. This is supported by data from Piper Sandler's 2024 Chief Information Officer (CIO) Survey, which suggests increased confidence in AWS's spending growth into 2024. Notably, AWS was the only cloud provider that saw an increase in net spending intentions, with a 2% rise compared to the first half of 2023. Following strong indications from both CIO and Ad Buyer surveys for the upcoming year, Piper Sandler has increased its 2024 AWS revenue projections by 1% and advertising revenue by 2%.
Read the full article here. Read time: 1 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
CRISPR Therapeutics ($CRSP)
🟩🟩🟩⬜️⬜️ - Buy (41%)
🟥🟥⬜️⬜️⬜️ - Pass (32%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (27%)
antho*** (buy) - Most definitely a bullish chart. Full confirmation on price over 76.
chica*** (pass) - Hard to be certain of their long-term outlook… very boom/bust.
palsru*** (buy) - I've had it in my portfolio for 3 years!
bucl*** (buy) - Crispr along with a partner Vertex recently received FDA approval for Casgevy to treat sickle cell. At the same time, their stock took a hit. As they have beat their EPS for the last 4 quarters. Now is the time to purchase the dip
manti*** (sell) - Their financials are a mess.
* There are more stock ideas later in the email!
MARKET OVERVIEW
Today’s market overview is brought to you by Tiicker. Did you know that you can earn 50% off Dicks Sporting Goods, 50% off a STARZ subscription, or 30% off Whirlpool appliances just for owning the stock? Learn more here
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 55%
The Fear v Greed index skyrocketed into “Extreme Greed” for the first time. The indexes were slightly up (except for the small-cap index), the news sentiment was slightly more bullish than the previous 7 days, and Yellowbrick Road readers remained at the same level of bullish.
STOCK MARKET NEWS
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QUIZ
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Which car company was originally a manufacturer of airplane engines before they started making cars? |
FEATURED INSIDER TRADE
This 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
Chief Executive Officer at Heritage Insurance Holdings, Inc. ($HRTG)
The Chief Executive Officer purchased 27,247 shares at $7.34/share ($200K total) which increased their holdings by 3.3%. The current price is $6.78 (-7.6%). (trade link)
Historic Returns
1m returns: 8% weighted | 2% median | 55% win rate (11/20)
3m returns: 16% weighted | 18% median | 70% win rate (14/20)
6m returns: 42% weighted | 26% median | 70% win rate (14/20)
1y returns: 71% weighted | 19% median | 63% win rate (12/19)
LINKS YOU’LL LOVE
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SECRET QUESTION
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Secret Question: Which stock is currently at the top of your watchlist? I’ve been looking at adding some homebuilders (like $LGIH) as a bet that rates have peaked and demand will increase again
BONUS STOCK IDEAS
BLOG POST
Medical Facilities Corp ($DR.TO)
Medical Facilities Corp (MFC) is a Toronto Stock Exchange listed owner of specialty surgery hospitals in the United States, owning majority stakes in its hospitals, which generate revenue through facility and professional fees. The hospitals focus on surgeries that include orthopedics, spine, pain management, and neurosurgery, predominantly serving growing populations.
Ticker: DR.TO | Price: CAD 8.86 | Price Target: 17.23 (+94%) | Timeframe: N/A
🏥 Surgery Hospitals | 💰 3.5% Dividend | 📈 Bullish Idea
Medical Facilities Corp (DR.TO) operates specialty surgery hospitals in the U.S. and trades at a compelling 8x P/FCF multiple, with a valuation significantly below its public peers and private M&A benchmarks, suggesting a ~50% discount. The company has undergone a strategic overhaul, slashing corporate costs, divesting non-core assets, and repurchasing 20% of its stock outstanding, signaling a clear capital return focus. With Q4 historically strong due to patients using medical benefits before expiry, a good quarter could draw investor interest. Despite past challenges, the company has reduced net debt significantly and maintained a ~3.5% dividend yield. Currently positioned as an attractive acquisition target, MFC is undergoing a substantial buyback program, boosting intrinsic shareholder value. The stock is underappreciated due to being an orphaned, illiquid Canadian listed stock with complex financials and historical operational issues. Risks include potential regulatory changes and inflationary pressures on margins. The expectation is that MFC will eventually be sold to a competitor or PE firm, offering a potential 93% premium over current market capitalization, while shareholders benefit from a solid dividend yield and share repurchases. I hold a long position in DR.TO.
Read the full article here. Read time: 7 min
HEDGE FUND
Aegis Value Fund's largest purchase - $NGS
Natural Gas Services (NGS) is a Texas-based energy logistics company involved in the fabrication, rental, and maintenance of compression equipment for oil & gas companies. It provides larger horsepower compression rental equipment and has a $125 million market cap, with debt recently increased to around $60 million to fund an expansion into new larger horsepower equipment.
Ticker: NGS | Price: $13.81 | Price Target: N/A | Timeframe: N/A
🛢️ Oil/Gas | 🛠️ Maintenance | 🏷️ Undervalued | 📈 Bullish Idea
The Fund has significantly invested in the energy sector, with the largest purchase being Natural Gas Services (NGS), a company specializing in the fabrication, rental, and maintenance of compression equipment for the oil & gas industry in Texas. Despite recent challenges, including executive changes, an increase in debt to $60 million for investment in new larger horsepower compression equipment, and lowered gas prices, NGS benefits from the return of Steven Taylor as CEO. Unlike its highly leveraged competitors, NGS has been growing its market share by taking advantage of its previously debt-free balance sheet. The company plans $150 million in capital expenditures to expand its rental fleet, with expectations of a strong free cash flow (FCF) return over 20% once the equipment is operational, potentially leading to a positive stock revaluation. Robust corporate governance is indicated by significant share ownership by the CEO and representation on the Board. The Fund currently holds a 2.4 percent stake in NGS, which trades at a 45 percent discount to tangible book value.
Read the full article here. Read time: 2 min
BLOG POST
Tiptree Inc. (NASDAQ: TIPT) Initial Screen
Tiptree Inc. is a diversified holding company, with a primary interest in specialty insurance through its majority stake in Fortegra, as well as other non-insurance financial assets. They focus on acquiring or investing in niche companies, specifically in the insurance sector and other selected markets, utilizing balance sheet capital to drive growth.
Ticker: TIPT | Price: $18.53 | Price Target: $31.37 (+68%) | Timeframe: N/A
💼 Holding Company | 💸 Specialty Insurance | 📈 Bullish Idea
Aryann Gupta pitches Tiptree Inc. (TIPT) as a buy opportunity with a market cap of $679.87mm and a share price of $18.50, highlighting its 73.1% ownership of specialty insurer Fortegra, which may be taken public, validated by a minority interest investment from Warburg Pincus. Fortegra has a strong financial performance with a 27% CAGR in GWPPE since 2019 and a consistent combined ratio in the low 90s, outperforming peers. The company excels in specialty insurance for underserved markets with a focus on niche products, maintaining profitability and risk control through low-risk limits and risk mitigation. Fortegra has a diverse product line in commercial and personal lines in the U.S. and extends similar offerings in Europe. Its U.S. Warranty Solutions segment covers a wide range of insurance on consumer goods, and distribution is through a large network, relying on experienced underwriters. CEO Richard Kahlbaugh's leadership is viewed positively, expecting further growth. Fortegra's competitive advantages include a focus on niche, underserved specialty lines with significant fee-based income, a scalable, proprietary technology platform, and strong economic alignment through risk-sharing with partners. Tiptree Capital encompasses Tiptree’s non-insurance operations, leveraging balance sheet capital to invest in companies outside of insurance. With Fortegra’s valuation pegged at ~$800mm based on Warburg Pincus' 24% stake acquired at 13.5x adjusted net income, and the increase in Fortegra's adjusted net income since, the stake implies a share value of ~$25.37 for TIPT, suggesting a 37% upside excluding Tiptree capital's valuation of $6/share. This analysis points to a total preliminary target price of $31.37/share, indicating a 74.2% upside potential for TIPT.
Read the full article here. Read time: 5 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ ServiceNow ($NOW) [42%]
🟨🟨⬜️⬜️⬜️ Unit Corporation ($UNTC) [34%]
🟥⬜️⬜️⬜️⬜️ Tapestry ($TPR) [24%]
Your Thoughts:
🤖 gbrig*** ($NOW): Government coverage encouraged me to read this.
🤖 emoj*** ($NOW): I personally developed a multi-module Service Now implementation for the government and know this product can easily revamp legacy apps and/or be an economical new install for any business/process flow.
🛢️ chica*** ($UNTC): I think they have a bit more of a predictive 5+ year trajectory and one that is in my circle of competence.
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WEEKLY TOURNAMENT
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🏆 This Week’s Leaderboard
drmon**** (34 points)
alpo*** (34 points)
josep**** (34 points)
Scoring
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