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Top stock ideas (Wed, Feb 14)
Connor Van Ooyen
February 14, 2024
YBR Portfolio // About // Sponsor YBR // YBR Premium
👋 Good Morning and Happy Valentines Day!
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 104 new readers who joined yesterday!
Our AI read and summarized 110 stock ideas, 1342 news articles, and 212 insider trades and found:
Investment fund pitches $DRVN with 200% upside (featured stock idea)
An obscure shipping stock trading at 0.5 PB, a homebuilder with 65% upside, and a credit and legal services provider (bonus stock ideas)
CPI comes in hot causing stocks to fall (news)
CEO at $HI bought $250k of his own stock (insider trade)
and much more…
Thanks for reading! Have a great day.
Connor
* If you missed yesterday’s email, don’t forget to read it here
FEATURED STOCK IDEA
FUND LETTER
Emeth Value Capital holding - Driven Brands Holdings ($DRVN)
Driven Brands Holdings Inc., together with its subsidiaries, provides automotive services to retail and commercial customers in the United States, Canada, and internationally. The company offers various services, such as paint, collision, glass, vehicle repair, car wash, oil change, and maintenance services.
Ticker: DRVN | Price: $13.42 | Price Target: $39.89 (+197%)
Market Cap: $2.2B | Timeframe: 5 years
🚗 Auto Services | 📈 Bullish Idea
Driven Brands Holdings Inc. (DRVN) is the largest automotive services platform in North America with a network of over 5,000 locations under iconic brands like Meineke, Take 5 Oil Change, and Carstar, servicing over 70 million vehicles a year. With its market leader position in a recession-resistant and growth-ready industry, Driven Brands aims to capitalize on the highly fragmented $350+ billion automotive care market backed by the car parc of 285 million vehicles in the U.S. driving more than three trillion miles yearly. Founded in 1971, the group has witnessed a spectacular expansion in locations and profits, driven by CEO Jonathan Fitzpatrick’s ownership and value-aligned management. Their expansion strategy includes both acquisitions and organic growth in diversified segments such as maintenance, collision, and quick-serve oil changes, all offering scalable and high-marginal profitable operations. The company plans to double the count of their prime asset, Take 5 Oil Change, over five years, while their new growth platform Auto Glass Now stakes a claim as the second-largest in the U.S. automotive glass market. Also, the world's largest car wash company, Take 5 Car Wash, signals cross-selling opportunities and membership growth despite current operational challenges. Further, the new Driven Advantage procurement platform opens a billion-dollar opportunity beyond the Driven Brands network. Despite recent setbacks causing a market cap loss, its highly franchised model and rapid earnings growth promise significant debt reduction and future scalability. With a strategic focus on technology, customer service, and expansion—plus an undervalued stock price with a target of $39.89 reflecting a 179% upside from year-end price—it presents a compelling long-term investment opportunity over 5 years.
Read the full article here. Read time: 25 min
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Featured Stock Idea
Pitney Bowes ($PBI)
🟩🟩🟩⬜️⬜️ - Buy (45%)
🟥🟥⬜️⬜️⬜️ - Pass (32%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (23%)
❌ shopp**** - The stakes are too high for the divestment of the GEC business. Also, the analyst missed the sunk costs (write-offs, redundant capital costs, penalties, etc.) related to the divestment, which could negatively impact the so-called operational savings.
✅ andy.**** - This is my kind of stock! A value buy with a great dividend! I’ll put this in my IRA and collect 5% “rent” while I wait!!
✅ mikemc**** - It’s not too expensive and could be very profitable. It’s low risk and offers a dividend in the meantime. It’s a buy for me
There are 3 more stock ideas after “Today’s Sponsor”
TODAY’S SPONSOR
+15 POINTS - WEEKLY TOURNAMENT
My Favorite Tools
I’ve spent the last few months setting up partnerships with my favorite investing tools and even getting some discounts for YBR readers. If you use my links, you’ll get a discount (for most of the tools) and I’ll earn a little money from the company!
Most of my advertisements in The Yellowbrick Road will be for these products going forward. If any of the tools look useful to you, make sure to sign up with my link to support The Yellowbrick Road!
I’m hoping to add a few more discounts for tools I love and use regularly, but this is a great start.
The Yellowbrick Suite of Tools
These are tools that I (or my friend) created.
Yellowbrick Road Premium (link) - The best collection of stock pitches on the internet. I find hundreds of stock pitches each day and filter those down to the best ~20-30. Only a few fit in the daily emails, but all of the stock pitches are added to the YBR Premium Website. Easily search/filter all of the stock pitches to find your next killer investment.
CEO Watcher (link) - The free, weekly email with 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.
Intentional Dollar (link) - Simple thoughts, tools, and questions to help you move your money forward. A free, weekly personal finance newsletter written by my friend Logan who is a CFP®.
My Favorite Tools
Investing tools that I use regularly. I’ve been lucky to partner with most of them to offer special deals to Yellowbrick Road readers.
Koyfin (link) - Koyfin is my most-used investing tool. It’s my personal Bloomberg terminal that doesn’t cost $2,000/month. It has all of the news, financials, watchlists, screeners, charts, etc that you need to be an informed investor. *Use my link for a 20% discount!
Simply Wall St (link) - The fastest and easiest way to get an overview of the most important fundamental metrics for a company. It’s not nearly as in-depth as Koyfin, but it’s a great place to start your analysis of a company (or a great tool if you don’t need a tool as sophisticated as Koyfin). It’s also pretty inexpensive (with a decent free tier) and you get a 14-day free trial with my link!
OptionStrat (link) - OptionStrat is the best option flow screener to find unusual option trades. I use it to screen for unusually large options trades. They also have a cool Options Profit Calculator and Analyzer to help you decide which kind of options trade to make. *Use my link for a 20% discount on your first month!
Quartr (link) - The best tool for earnings calls, transcripts, slides, and reports. You can listen to calls in real time or look at any company’s historical earnings documents. *Use the code “YB20” for 20% off!
Shortform (link) - My favorite tool for nonfiction book summaries and guides. They have 1000s of nonfiction books and even connect ideas between the books. I love using it to get the key points from books and then will read the full book if I want more. *Use my link for a free trial and a 20% discount
BONUS STOCK IDEAS
BLOG POST
StealthGas: An Obscure Shipping Stock With Healthy Financials Trading At 0.5 PB
StealthGas Inc., together with its subsidiaries, provides seaborne transportation services to liquefied petroleum gas (LPG) producers and users worldwide. It also offers crude oil and natural gas.
Ticker: GASS | Price: $7.22 | Price Target: $14.50 (+100%)
Market Cap: $254M | Timeframe: N/A
🛢️ Oil/Gas Transportation | 📈 Bullish Idea
StealthGas Inc. (NASDAQ: GASS), a player in the small gas carriers segment, presents a compelling investment opportunity with its robust balance sheet, record low order books, and an aging fleet that indicates potential market tightening. GASS's fleet has an average age of 10 years and showed strong performance with 15% YoY net revenue growth and a 128% increase in EPS in 3Q23. The company's strategy for shareholder returns currently prioritizes share buybacks, having announced an additional $10 million allocation towards repurchases. Despite a strong bull run, GASS is undervalued at 49% P/NAV, 2.03 EV/Sales, and 4.52 EV/EBITDA, trading well below global energy and equity comparables. The company's financials are notable with a decrease in total debt by 70% since 2018, leaving them with $127 million in debt and strong liquidity with $73.2 million in cash. GASS's growth is fueled further by industry tailwinds such as sanctions on Russian LPG exports and regional supply chain constraints. At a current valuation significantly lower than its NAV of $14.5/share, GASS is positioned for continued growth, making it an attractive investment with a strong buy recommendation.
Read the full article here. Read time: 6 min
BLOG POST
Beazer Homes: Weak Q1 Results, 2024 And 2025 Growth, And Still Undervalued
Beazer Homes USA, Inc. operates as a homebuilder in the United States. It designs, constructs, and sells single-family and multi-family homes under the Beazer Homes, Gatherings, and Choice Plans names.
Ticker: BZH | Price: $28.97 | Price Target: $48 (+66%)
Market Cap: $913M | Timeframe: 2024
🏡 Homebuilder | 📈 Bullish Idea
Despite a weak Q1 2024 performance with lower revenues, earnings per share, negative free cash flow, and lower EBITDA, Beazer Homes USA (NYSE: BZH) remains optimistic due to increasing net new orders and growing community counts, which are up 14% year-over-year to 136 with plans to reach over 155 by year-end. Q1 struggles were anticipated and were exacerbated by a cyber-attack delaying 40 home closings, representing roughly 5% of quarterly sales. The company is navigating a challenging market where rising mortgage rates peaked at 8%, but recent reductions to 6.63% and a supply-demand imbalance in the housing market favor growth. Beazer's management has committed to an aggressive growth strategy, demonstrated by a 73% year-over-year increase in land spend aimed at expanding from approximately 130 to 200 active selling communities by fiscal '26, consequently resulting in negative free cash flow. However, long-term debt has been reduced to its lowest level in a decade at $975 million. Beazer anticipates over 4,700 closings and an ASP of about $510,000 in 2024 but is prudent in unit price forecasting compared to Zillow's and Goldman Sachs' higher price rise expectations of 3.7-5%, prompting an EPS estimate of $5 per share, higher than Beazer's own $4.5. The company's valuation reveals a lower price to book and price to earnings ratios compared to its peers, suggesting undervaluation, especially given its rapid community growth. Potential investor risks include a Fed-induced recession and the undervaluing trend of small-cap stocks. Nevertheless, Beazer Homes trades below book value despite improved financials and expanding growth, reinforcing a strong buy rating with a 2024 price target of $48, about a 60% increase from the current stock price.
Read the full article here. Read time: 5 min
BLOG POST
Anexo ($ANX.L)
Anexo Group Plc, together with its subsidiaries, provides integrated credit hire and legal services to the clients involved in a non-fault accident in the United Kingdom. It operates in two divisions, Credit Hire and Legal Services.
Ticker: ANX.L | Price: $63.80 | Price Target: N/A
Market Cap: $80M | Timeframe: N/A
💼 Legal Services | 📈 Bullish Idea
Anexo Group PLC (LSE: ANX.L) operates two main divisions in the UK: credit-hire services through EDGE, providing loaner vehicles to non-fault accident victims, and legal services via Bond Turner for recovering these costs, along with sub-divisions like PALS and IGCA, and a new housing disrepair division handling social housing claims. The company has a significant legal case load, including representing plaintiffs in diesel emissions litigation against vehicle manufacturers post-Volkswagen scandal. Post-2022 strategic review, Anexo is focusing on cash generation: expanding the Housing Disrepair division, which has quicker settlements and stronger profitability (PBT margins around five times higher than the Credit Hire business), while scaling back the capital-intensive Credit Hire operations. Historically, billed revenue takes about 18 months to collect in cash; however, the transition in business mix and cash inflow from emissions cases can improve cash conversion and potentially revitalize a progressive dividend policy. Founders Alan Sellers and Samantha Moss hold 34.48% of Anexo, while DBAY Advisors owns another 28.51% and offered to buy the company at 150p per share in June 2021, valuing it at 1.6x P/TBV and 11.9x EV/EBIT—compared to the current valuation of 0.4x P/TBV and 3.8x EV/EBIT. This combination of strategic changes, substantial shareholder interest, and low valuation presents a compelling investment opportunity to surpass a 25% return threshold.
Read the full article here. Read time: 2 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ Spirit Airlines ($SAVE) [63%]
🟨🟨⬜️⬜️⬜️ Calumet ($CLMT) [24%]
🟥⬜️⬜️⬜️⬜️ Uber ($UBER) [13%]
Your comments:
🛩️ manis*** ($SAVE): I think SAVE is a great idea for a quick short-term win. I entered it twice and exited too - profitably. Now waiting for SAVE to drop to close to 6$ and re-enter.
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 77% bullish
Our first bearish day across all of our indicators in a while. The markets were down significantly after the CPI readings came in hot. All of the indexes were down well over 1% with the small-cap index down almost 4% (after finally turning green for the year the day before)! The Fear v Greed Index fell 8 points and out of the “Extreme Greed” section. Yellowbrick Road readers’ sentiment also fell a little bit and the news sentiment took a massive dip and is the most bearish we have seen since we started tracking it a couple of months ago.
STOCK MARKET NEWS
Consumer prices rose 0.3% in January, more than expected, as the annual rate moved to 3.1% - CNBC
Coca-Cola revenue tops estimates on resilient demand, higher prices - Reuters
Shopify shares down after company reports light guidance - CNBC
Hasbro stock plunges after revenue drop, downbeat outlook - CNBC
Datadog Earnings Top Views, But DDOG Stock Tumbles On Weak Guidance - Investors Business Daily
A Surprise Q4 Profit Takes Robinhood (HOOD) Stock Up 15% - InvestorPlace
Jeff Bezos sells more than $2 billion in Amazon stock - CNBC
Hammered NYCB shares rise on confidence-boosting steps by top executives - Reuters
FEATURED INSIDER TRADE
The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
President & CEO at Hillenbrand, Inc. ($HI)
The President & CEO purchased 5,600 shares at $44.94/share ($252K total) which increased their holdings by 4.4%. The current price is $46.99 (+4.6%). Their median purchase size is $125K and this is their 1st largest purchase out of 3 all time. (trade link)
Historic Returns
1m returns: 16% weighted | 33% median | 100% win rate (2/2)
3m returns: 39% weighted | 39% median | 100% win rate (1/1)
6m returns: 40% weighted | 40% median | 100% win rate (1/1)
1y returns: 38% weighted | 38% median | 100% win rate (1/1)
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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
Which regulatory change in 1996 posed a challenge to LTCM's bond arbitrage strategy, leading it to seek riskier trades? |
Yesterday’s Question: What was a unique aspect of LTCM's investment approach that contributed to both its initial success and eventual downfall?
Answer: LTCM was known for its reliance on extensive, complex computer models to drive trading decisions. While this initially contributed to its success, it also played a role in its downfall as it failed to predict and adapt to extreme market events.
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
Percent brings private credit deals to everyday accredited investors. Their weighted average APY for deals in 2023 was 18.83% and they are offering up to a $500 sign-up bonus with your first investment. Learn more*
* Sponsored link
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 have any fun Valentines Day plans? My wife and I are going to a Valentines Day 3-course meal at a nice, local restaurant. Should be fun!
YELLOWBRICK ROAD PREMIUM
Want the best database of stock ideas (including 100s that weren’t included in the free emails)?
I built a website where I put all of the top stock ideas my tool finds. You can easily search and filter the stock ideas to find the perfect ideas for you.
Upgrade to Yellowbrick Road Premium for access.
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
chelss**** (68 points)
mkant*** (68 points)
g.rock**** (68 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)
INVITE YOUR FRIENDS
+50 POINTS - WEEKLY TOURNAMENT
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THAT’S ALL FOLKS
+3 POINTS - WEEKLY TOURNAMENT
Thank you so much for reading today’s email! Your support is the only way I can write this email for free every day. Give me feedback in the poll below to earn 3 points for this week’s tournament.
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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