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Top stock ideas (Tue, Jan 23)
Connor Van Ooyen
January 23, 2024
YBR Portfolio // About // Sponsor YBR // YBR Premium
👋 Good Morning!
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 111 new readers who joined yesterday!
Our AI read and summarized 121 stock ideas, 1079 news articles, and 183 insider trades and found:
JP Morgan has a 2.5% dividend and 30% upside (featured stock idea)
A coffee supplier with 250% upside, Stellantis is a strong buy, and a telehealth company poised to benefit from the growth of weight-loss drugs (bonus stock ideas)
Layoffs surged 98% in 2023 (news)
An insider bought $600k of his own 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
BLOG POST
JPMorgan: Still a Buy with Record Earnings & Share Price Post Q4
JPMorgan Chase & Co. (ticker: JPM) is an American multinational investment bank and financial services holding company that provides a broad range of financial services, including investment banking, asset management, treasury and securities services, commercial banking, and retail banking.
Ticker: JPM | Price: $170.11 | Price Target: $225 (+32%)
Market Cap: $486B | Timeframe: by 2026 year-end
🏦 Banking | 💰 2.5% Dividend | 📈 Bullish Idea
JPMorgan Chase & Co. (JPM) is currently trading at a price-to-earnings (P/E) ratio of 11.4x, which is below management’s medium-term target of a 17% Return on Tangible Common Equity (ROTCE) and lower than the historical P/E of 13.9x in 2019 and 10.4x adjusted for 2023. Despite challenges such as a potential decline in Net Interest Income (NII) and increased expenses in 2024, the company has performed strongly with a ROTCE of 22% in 2023 (adjusted for one-off items) and is on track to meet its ROTCE target. The assessment is that JPM's shares can provide a 45% total return (13.8% annualized) by 2026 if the P/E re-rates to 14.5x, supported by a consistent dividend yield of 2.5% and ongoing share buybacks. This contrasts with the lower performance of Bank of America (BAC), making JPMorgan a Buy recommendation with an anticipated share price target of $225 by 2026.
Read the full article here. Read time: 7 min
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Featured Stock Idea
Kyndryl ($KD)
🟩🟩🟩⬜️⬜️ - Buy (54%)
🟥⬜️⬜️⬜️⬜️ - Pass (20%)
🟨🟨⬜️⬜️⬜️ - Watchlist (26%)
There are 3 more stock ideas after “Today’s Sponsor”
TODAY’S SPONSOR
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BONUS STOCK IDEAS
FUND LETTER
Lake Cornelia Research is long Farmer Brothers Co ($FARM)
Farmer Brothers Co. is an American coffee foodservice company that provides roasted coffee, tea, and culinary products to foodservice establishments and retailers.
Ticker: FARM | Price: $3.43 | Price Target: $12 (+250%)
Market Cap: $66M | Timeframe: 2025
☕️ Coffee Foodservice | 📈 Bullish Idea
Farmer Brothers (ticker: FARM), a Texas-based coffee and foodservice company that's been public since the early 1980s, operates across approximately 30,000 'doors' including small independent restaurants, large chains, hotels, healthcare facilities, and grocery chains with both private label and consumer-branded products. With a recent quarterly revenue of $82 million diversified across coffee (46%), tea and other beverages (25%), culinary (21%), spices (7%), and delivery surcharge fees (2%), FARM boasts a gross margin of about 40%. Its stock price hovers around $3 with an equity market cap of around $66 million and an enterprise value of roughly $116 million, translating to 0.35x EV/Sales and below 1.0x gross profit. Strategic sales initiatives and management changes spearheaded by activist involvement, including the $100 million sale of its challenging B2C business to Treehouse, positions FARM for expected sales of $450 million by 2025, gross profits of approximately $180 million, and EBITDA of $40-50 million; these figures could drive the stock price above $12. Challenges like price-cost assimilation have been identified but new management sees pricing power and SKU rationalization as key strategies. With a $75 million revolver and only $23 million drawn, management anticipates the company will be FCF positive soon. Despite some risks including the modest trading volume of this small-cap stock, the near-term pricing adjustments and valuation make FARM an attractive investment with potential for significant appreciation.
Read the full article here. Read time: 4 min
BLOG POST
Stellantis Is A Strong Buy Based On Valuation And Dividend
Stellantis N.V., with the ticker STLA, is a multinational automotive manufacturer formed from the merger of the Italian-American corporation Fiat Chrysler Automobiles and the French PSA Group, producing a wide range of passenger vehicles and commercial vans under various brand names including Fiat, Jeep, Dodge, Ram, Peugeot, and Citroën.
Ticker: STLA | Price: $21.33 | Price Target: $28.66 (+34%)
Market Cap: 65B | Timeframe: mid to late 2024
🚗 Auto Manufacturer | 💰 6% Dividend | 📈 Bullish Idea
Stellantis NV (NYSE:STLA), formed by the merger of Fiat Chrysler and Peugeot, has seen a 35% total return and is gaining attention for its undervalued stock, particularly after a 6-month surge coinciding with robust auto sales. The company is capitalizing on the EV market through investments and strategic partnerships, evidenced by its collaboration with China's Leapmotor, and aims to offer over 75 EVs by 2030. Stellantis’ broad brand portfolio and ambitious diversification, including investments in Archer Aviation, plus digitalization initiatives, contribute to an industry-leading valuation at a mere 3x P/E—substantially lower than peers like GM and Ford. Stellantis' cost-saving synergies from its merger have been sizable, saving an estimated $5.7 billion, hinting at significant profit growth potential. The company is well-positioned to capitalize on easing economic headwinds, with car shipments expected to grow and an anticipated 6%+ dividend yield. Nonetheless, risks like supply chain issues, geopolitical tensions, economic cycles, EV transition challenges, and strikes are present, but Stellantis has a strong floor around $18.50, suggesting limited downside risk (approx. 15%). Based on its current path, the potential upside for Stellantis' stock is 27-33% by mid-to-late 2024, aligning with analyst targets and factoring in the upcoming dividend.
Read the full article here. Read time: 5 min
BLOG POST
Teladoc Health: Weight Management Rescue
Teladoc Health, Inc. (ticker: TDOC) is a multinational telemedicine and virtual healthcare company that offers a range of services including telehealth, medical opinions, AI and analytics, and licensable platform services. The company enables patients to receive remote medical care from healthcare professionals via phone, video, or app.
Ticker: $TDOC | Price: $20.94 | Price Target: N/A
Market Cap: $3.4B | Timeframe: N/A
🩺 Telemedecine | 📈 Bullish Idea
Teladoc Health, Inc. (NYSE: TDOC) is positioned to capitalize on the growing demand for virtual weight loss management services due to the high cost of obesity drugs like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, listed over $1,000 each. Employers are increasingly covering these costs, requiring lifestyle changes before prescribing such drugs, and Teladoc offers virtual care tools critical for managing these requirements. Blue Cross Blue Shield of Michigan has already integrated Teladoc's weight management program, indicating a market shift towards comprehensive virtual care solutions, especially post-COVID. Despite decelerating growth rates, with Q4'23 revenue expected at $671.1 million (5.2% YoY) and EPS at -$0.24, investors are eying 2024 guidance for signs of increased demand influencing revenue growth. Teladoc's adjusted EBITDA target for 2023 is at least $320 million, and the company trades at 9x its 2024 EBITDA targets. While Truist analysts predict a large potential market for virtual obesity drug management, Teladoc's 2024 contribution remains uncertain. However, the stock is considered a Strong Buy on the premise that weight loss management programs can drive growth and, when realized, will lead to both sales growth and valuation multiple expansion.
Read the full article here. Read time: 4 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ Nvidia ($NVDA) [48%]
🟨🟨⬜️⬜️⬜️ IWG ($IWG.L) [33%]
🟥⬜️⬜️⬜️⬜️ Roblox ($RBLX) [29%]
Your comments:
⚡️ mauri*** ($NVDA): I think NVDA will overperform the sector
⚡️ lorili*** ($NVDA): Chips are the way of AI and the future
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 72% bullish
The bull run continues! Yellowbrick Road readers hit their most bullish level ever and broke 70% bullish for the first time. All of the indexes were green and the Russell finally led the way with a huge 2% day. Surprisingly, the news sentiment is slightly lower than the last 7-day’s average, but that is mostly because the end of last week was super bullish, and the Fear v Greed index fell by 1 point.
STOCK MARKET NEWS
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Agriculture Giant ADM's Stock Dives on Accounting Probe, Outlook Downgrade - Investopedia
Google cites ‘durable cost savings' as 2024 goal as CEO Sundar Pichai warns of more layoffs - New York Post
Watchdog report is critical of former Fed officials in stock trading controversy - CNBC
Layoffs surged 98% in 2023; It could get worse this year - Fox Business
'It's really bad': China strategist warns of deflation and rock-bottom consumer confidence - CNBC
No 'economic collapse': Top Citi strategist says healthier economic growth is coming - CNBC
Macy's rejects $5.8B takeover bid to go private - Fox Business
Ford dealership details 'struggle' with EV truck as 'concerns' mount - Fox Business
FEATURED INSIDER TRADE
The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
Chairman and CEO at OLB GROUP, INC. ($OLB)
The Chairman and CEO purchased 784,212 shares at $0.77/share ($600K total) which increased their holdings by 17.0%. The current price is $0.82 (+7.2%). (trade link)
Historic Returns
1m returns: 20% weighted | 16% median | 100% win rate (5/5)
3m returns: 20% weighted | 19% median | 75% win rate (3/4)
6m returns: -1% weighted | -3% median | 50% win rate (2/4)
1y returns: -8% weighted | -7% median | 0% win rate (0/3)
Note: It’s marked as a purchase, but it is actually shares given to the CEO in lieu of a cash bonus.
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
When did Coca Cola join the Dow Jones Industrial Average |
Yesterday’s Question: Which of these companies was NOT part of the original Dow Jones Industrial Average in 1896?
Answer: Coca Cola
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
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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: What was the last stock you bought? I bought Monday recently due to some unusual options trading I saw and bought $MU and $AMD as short-term semiconductor plays.
YELLOWBRICK ROAD PREMIUM
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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
jmukle**** (34 points)
corbi*** (34 points)
stocksa**** (34 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
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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