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Top stock ideas (Wed, Feb 28)
Connor Van Ooyen
February 28, 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 102 new readers who joined yesterday!
Our AI read and summarized 154 stock ideas, 1232 news articles, and 267 insider trades and found:
International Money Express is starting to expand (featured stock idea)
Bill Ackman has Google as a top holding, an Australian company with an 8% dividend, and a pitch for a sand supplier (bonus stock ideas)
Apple cancels work on EV (news)
Two CEOs bought $1M of their 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
International Money Express: Expansion Strategy and Financial Outlook
International Money Express, Inc., through its subsidiary, operates as a money remittance services company in the United States, Latin America, Mexico, Central and South America, the Caribbean, Africa, and Asia.
Ticker: IMXI | Price: $19.91 | Price Target: $37.19 (+78%)
Market Cap: $728M | Timeframe: 5 years
💸 Money Remittance | 🇲🇽 Latin America | 📈 Bullish Idea
International Money Express ($IMXI) appears increasingly appealing as a growth opportunity due to its impressive Return on Invested Capital (ROIC) exceeding 20% and non-cash Return on Assets (ROA). The company's expansion beyond its stronghold in the Latin American market into Europe and Africa underscores its ambition to become a global payment processor and remittance provider. With nearly a quarter of the Latin America remittances market share already secured, $IMXI is diversifying its services globally while also introducing additional payment options such as credit and banking services. Projected earnings for the next 10-12 years anticipate a growth rate of 12-17%, with potential for revenues to double within the next five years, supported by recent acquisitions and a substantial cash reserve of $200 million, equivalent to a quarter of its market capitalization. Significant growth in revenue streams is evident, with a 20% increase in principal transferred and a 35% rise in active customers. Looking ahead, $IMXI forecasts revenues reaching $1.2-1.3 billion and net income totaling $120-130 million in five years, alongside active share repurchases reflecting management's confidence in the company's undervaluation. With a calculated fair value ranging between $1.1-1.3 billion or 20-25 times trailing earnings, considering its rapid growth trajectory, $IMXI appears poised for further success.
Read the full article here. Read time: 1 min
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Featured Stock Idea
Franco-Nevada Corporation ($FNV)
🟩🟩🟩⬜️⬜️ - Buy (55%)
🟥🟥⬜️⬜️⬜️ - Pass (27%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (18%)
✅ alpo**** - The dip was an overreaction to a not-very-important event. They are Incredibly strong, the loss of one royalty is not very important. It’s on sale.
❌ jasonm**** - The high valuation and geopolitical risks require careful consideration. A drop in gold prices could also affect the company's stock performance
There are 3 more stock ideas after “Today’s Sponsor”
TODAY’S SPONSOR
+15 POINTS - WEEKLY TOURNAMENT
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BONUS STOCK IDEAS
Bill Ackman discusses why Google remains one of his top holdings
Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments.
Ticker: GOOG | Price: $138.88 | Price Target: N/A
Market Cap: $1.78T | Timeframe: N/A
🔎 Search | 📢 Advertising | 📈 Bullish Idea
Bill Ackman discusses why Google remains a top holding in his view, attributing it to the significant investments, time, and energy the company has dedicated to its development. Ackman believes that Google's AI capabilities potentially surpass those of Microsoft, despite the market's overreaction. He notes that Google operates under intense global scrutiny, limiting its ability to take risks like a startup. Ackman suggests that Google's cautious approach to product releases, such as the early version of Bard, may have led to misconceptions about its capabilities, which he believes are on par or ahead of competitors. He emphasizes Google's vast advantages, including its extensive data sets from various applications like search and email, as well as its talented engineers and substantial financial resources. Ackman concludes that Google represents a compelling investment opportunity, considering its minimal valuation relative to its current earnings compared to other major companies.
Read the full article here. Read time: 1 min
BLOG POST
Hurdle Rate Unit Trust - Centrepoint Alliance
Centrepoint Alliance Limited, together with its subsidiaries, provides financial services in Australia. It operates through Licensee and Advice Services, Fund Management and Administration, and Consulting Services segments.
Ticker: CAF.AX | Price: 0.30 | Price Target: 0.41 (+37%)
Market Cap: 61M | Timeframe: N/A
🏦 Financial Services | 🇦🇺 Australia | 💰 8.3% Dividend | 📈 Bullish Idea
Centrepoint Alliance Limited (ASX: CAF) is an Australian financial services provider with successful acquisitions such as Enzumo, ClearView Advice, and Financial Advice Matters, demonstrating proficiency in integration and broadening services for organic growth, particularly through managed accounts and credit services. The acquisitions, particularly ClearView's, have led to significant improvements in earnings per share and return on equity. Despite advisor growth remaining modest, Centrepoint's capital-light business model reflects in its negative net tangible asset position due to the nature of licensing revenue, which is key and mainly staff-related expenditures. Insider ownership is minimal, though noteworthy shareholders include COG Financial Services and Sequoia Financial Group. A previous acquisition bid suggests a potential price target of $0.41, a 34% premium to the current stock price. Centrepoint has substantial revenue and capital loss carryforwards, which may attract acquirers, particularly given its attractive earnings yield of 12% and a promising dividend yield of about 8%. Overall, Centrepoint is positioned for potential earnings growth or multiple expansion to meet investment return thresholds.
Read the full article here. Read time: 3 min
BLOG POST
Smart investment in Smart Sand, Inc
Smart Sand, Inc., an integrated frac sand supply and services company, engages in the excavation, processing, and sale of sands or proppant for use in hydraulic fracturing operations in the oil and gas industry in the United States. It also provides logistics services; and SmartSystems, a wellsite storage solution.
Ticker: SND | Price: $2.08 | Price Target: N/A
Market Cap: $80M | Timeframe: N/A
🏗️ Sand Excavation | 📈 Bullish Idea
Smart Sand, Inc. (ticker: SND) is a top supplier of Northern White frac sand, currently undervalued, trading at approximately 50% of its liquidation value and 30% of its book value despite a strong balance sheet and escalating revenues and earnings. The company emerged resilient from an industry downturn caused by oversupply and a pivot to inferior but cheaper in-basin sand, making strategic acquisitions like the Blair, Wisconsin mine and expanding into Canada. SND bought back 11.3% of its shares at $1.71 from Clearlake Capital and is forecasted to increase sand sales by at least 10% in 2024, while continuing share buybacks. With full control of 30% of the company's shares, the CEO is aligned with shareholder interests. SND has low debt, with Q3 2023 being one of the best quarters and the stock priced below $2, not reflecting recent profitability. Rystad Energy's report underscores Northern White's superiority to in-basin sand in efficiency and yield, suggesting potential for share price rerating if industry attention shifts back to higher quality proppants and as the company focuses on lowering production costs. The risk is mainly seen as opportunity cost, with SND positioned as a low-risk investment with the possibility of high returns, hinged on the company's continued performance improvement and industry trends recognizing the value of high-quality frac sand.
Read the full article here. Read time: 7 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ Micron Technology ($MU) [58%]
🟨🟨⬜️⬜️⬜️ Amazon ($AMZN) [27%]
🟥⬜️⬜️⬜️⬜️ Blueprint Medicines ($BPMC) [15%]
Your comments:
⚡️ 1audi*** ($MU): Chips that can handle AI technology will be in high demand for the foreseeable future.
MARKET OVERVIEW
The Market Overview is powered by Koyfin (link). Koyfin is my personal Bloomberg terminal that doesn’t cost $2,000/month. It has all of the news, financials, watchlists, screeners, charts, etc that I need to be an informed investor. *I’ve partnered with them to give you a 20% discount if you use my link!
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 78% bullish
A very green day yesterday! After a few days down near 70% bullish, YBR readers jumped back up to 78% bullish. All of the indexes were green except for the Dow and they are all now healthily green on the year. The Fear v Greed Index remains at 78 (“Extreme Greed”), but the news sentiment is still only at “slightly bullish” levels.
STOCK MARKET NEWS
Macy's forecasts annual sales below estimates, to shutter 150 stores - Reuters
Hess shares drop as fight with Exxon Mobil over Guyana oil threatens Chevron takeover - CNBC
Apple cancels work on EV, moves staff to AI project, Bloomberg reports - Reuters
Viking Therapeutics stock jumps 80% after positive weight loss drug trial results - CNBC
Lowe's beats earnings estimates as sales fall — and the company expects revenue to slide again this year - CNBC
Unity shares sink on weak guidance - CNBC
Warner Bros. Discovery halts merger talks with Paramount Global, sources say - CNBC
Home prices hit a new all-time high in December - Fox Business
Intuitive Machines shares tumble as moon mission nears premature end - Reuters
BIGGEST INSIDER PURCHASES
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President and CEO at Allegion plc ($ALLE) purchased 10,000 shares at $132.41/share ($1.32M total) which increased their vested holdings by 10.6%. Their median purchase size is $1.32M and this is their 2nd largest purchase out of 3 all time (link)
Chief Executive Officer at ILLUMINA, INC. ($ILMN) purchased 7,330 shares at $135.29/share ($992K total) which increased their vested holdings by 97.3%. Their median purchase size is $992K and this is their 1st largest purchase out of 1 all time (link)
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
By the time of its collapse in 1998, what was the total amount of money Long-Term Capital Management (LTCM) had lost? |
Yesterday’s Question: Following the collapse of LTCM, what significant change occurred in the hedge fund industry and financial regulation?
Answer: The collapse of LTCM led to increased scrutiny of hedge funds, resulting in greater demands for transparency and improved risk management practices in the industry.
LINKS YOU’LL LOVE
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Crowd outside the NYSE during the crash in 2029
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