- 🟨 The Yellowbrick Road
- Posts
- Best stock ideas (Wed, Feb 7)
Best stock ideas (Wed, Feb 7)
Connor Van Ooyen
February 07, 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 112 new readers who joined yesterday!
Our AI read and summarized 114 stock ideas, 1422 news articles, and 267 insider trades and found:
A fund pitches a stock with 100%+ upside (featured stock idea)
A clever way to buy UMG Music Group, a German real estate company, and IBM has a 3.5% dividend and is a strong AI play (bonus stock ideas)
SNAP whiffs on earnings (news)
The 3 biggest insider purchases (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
Maran Capital top holdings: Clarus ($CLAR)
Clarus Corporation, with the ticker CLAR, is an American company that designs, manufactures, and markets outdoor equipment and apparel for climbing, mountaineering, backpacking, skiing, and other outdoor recreation activities under various brands, including Black Diamond, Sierra, and PIEPS.
Ticker: CLAR | Price: $5.98 | Price Target: $13 (+117%)
Market Cap: $236M | Timeframe: next few years
🧗 Outdoor Equipment | 📈 Bullish Idea
Clarus, under the ticker CLAR, agreed to sell its Precision Sport segment for $175 million to a financial buyer, trumping the $160 million offer from its chairman. The company originally invested around $110 million between 2017 and 2020 for the assets that comprise this segment, and the sale represents a successful investment with an estimated IRR exceeding 20%. Expected to close within this quarter, this deal will leave Clarus with a fortified balance sheet, potentially having $1.35-$1.50 net cash per share. With an undervalued market cap at roughly $170 million, Clarus's prime segments, Black Diamond Equipment and Rhino Rack, offer growth potential that could see the stock double or triple over the next few years. Catalysts include potential share repurchases post-sale, ongoing legal claims against HAP Trading with a significant possible financial recovery, and an upcoming analyst day to reveal the new leadership team and multiyear strategy, which could shift investor perspectives on the company's long-term prospects.
Read the full article here. Read time: 2 min
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Featured Stock Idea
Sotera Health Company ($SHC)
🟩🟩🟩⬜️⬜️ - Buy (51%)
🟥⬜️⬜️⬜️⬜️ - Pass (24%)
🟨🟨⬜️⬜️⬜️ - Watchlist (25%)
❌ jden**** - More data is needed to quantify the legal risk associated with last year's successful lawsuit claim in excess of $350 million for 1 injured party. There are dozens of additional injured parties that suffered severe cancer illnesses. It appears obvious the risks are attributable to the factory involved since it was ordered to be shut down.
✅ findmr**** - Company appears strong with their customer retention Rate and 10% sales growth.
There are 3 more stock ideas after “Today’s Sponsor”
TODAY’S SPONSOR
+15 POINTS FOR CLICKING SPONSORED LINK - WEEKLY TOURNAMENT
Earn 5.1% interest on your cash (no strings attached!)
Earn thousands of dollars on your saved cash!
Want to crush your savings goals in 2024? Make your cash work harder with a high-yield cash account on Public. Right now, you can earn 5.1% APY*–one of the highest rates in the market.
With a high-yield cash account on Public, you get:
No fees
No subscription
No minimum balance requirements
No maximum balance limits
Unlimited transfers and withdrawals
20x the standard FDIC coverage of up to $5M
That means you can grow your cash with 5.1% interest with no strings attached–it’s as simple as that.
*As of 12/14/2023, annual Percentage Yield (APY) is variable and may change without notice.
A High-Yield Cash Account is a secondary brokerage account with Public Investing, member FINRA and SIPC. Funds from this account are automatically deposited into partner banks where they earn a variable interest and are eligible for FDIC insurance. Neither Public Investing nor any of its affiliates is a bank. US only. Learn more.
BONUS STOCK IDEAS
FUND LETTER
Greenwood Investors holding - Bollore SE ($BOL.PA)
Bolloré SE engages in the transportation and logistics, communications, and industry businesses in France, rest of Europe, the Americas, Asia, Oceania, and Africa. It operates through Bolloré Logistics, Bolloré Energy, Communications, and Industry segments.
Ticker: BOL.PA | Price: 6.14 | Price Target: N/A
Market Cap: 17.8B | Timeframe: N/A
🎵 Music | 🚛 Transportation/Logistics | 💰 1% Dividend | 🇫🇷 France | 📈 Bullish Idea
Bollore SE (BOL.PA), with its dominant stake in Universal Music Group (UMG), is significantly undervalued, as the market underestimates UMG's growth potential in light of streaming services moving to an 'artist-centric' model. UMG, controlling a significant portion of top music charts and streams, is poised to see a revenue growth rate exceeding 20%, potentially doubling its operating income due to this model shift. Bollore, backed 118% by UMG's fair market value, with each 10% UMG valuation change impacting its own by 12%, is attractive as it has shed its cyclical businesses and amassed a cash reserve of €5.67 per net share, representing 92% of its equity. Currently trading at a 63% discount to its NAV—comprising public securities and cash—the greatest risk is a potential private buyout at a premium. With Vincent Bolloré's consistent stock buybacks below half of NAV, the investment in UMG sets Bollore up for substantial outperformance, especially as it's managed by founders with a track record of striking back after periods of underperformance relative to tech-driven market indices.
Read the full article here. Read time: 2 min
BLOG POST
Vonovia: Despite Recent Rebound, Still Has A Lot Of Gas Left In The Tank
Vonovia SE (ticker: VONOY) is a German real estate company specializing in residential properties, with a portfolio that includes managing and developing residential spaces as well as related services to tenants.
Ticker: VONOY | Price: $14.72 | Price Target: $50 (+240%)
Market Cap: $24.6B | Timeframe: N/A
🏡 Real Estate | 🇩🇪 Germany | 📈 Bullish Idea
Despite a 70% increase in Vonovia's (OTCPK:VONOY) stock price since March 2023, the leading German property company's shares remain undervalued, presenting a strong buy opportunity. The bullish outlook is based on several factors: a significant in-place-to-market rent gap, expected easing of European interest rates, and a profitable residential-for-sale business that should rebound due to a structural housing shortage in Germany. Vonovia traded at just 0.4x book value during its low, far below its historical range of 1.0x up to 1.6x book value. Rental growth is imminent, thanks to regional rental benchmarks (Mietspiegel) that will catch up to market rents, despite current regulatory caps. Interest rate pressures are easing, and Vonovia's cost of debt remains below market due to a staggered debt maturity profile. Furthermore, the residential development segment anticipates recovery as housing demand continues to outpace supply and permits for new construction drop. A DCF model suggests Vonovia’s share price should exceed €50, reflecting an organic rent growth potential. Risks include EU energy efficiency requirements and the potential for withholding tax on dividends, though these are mitigated by Vonovia's energy-efficient portfolio and the option for stock dividends. In summary, Vonovia offers an undervalued opportunity for investors, with room for appreciation and a safe profile for income-oriented investors.
Read the full article here. Read time: 9 min
BLOG POST
IBM 2024 Outlook: Uniquely Set To Ride The Open-Source AI Wave
IBM (International Business Machines Corporation) is an American multinational technology company known for its computer hardware, software, and IT services and consulting. It has a significant legacy in the computing industry with a history dating back to 1911.
Ticker: IBM | Price: $183.41 | Price Target: $277.53 (+51%)
Market Cap: $171B | Timeframe: N/A
🤖 Enterprise AI | 💰 3.5% Dividend | 📈 Bullish Idea
International Business Machines Corporation (IBM) has been experiencing a business downturn for over a decade but is pivoting towards open-source AI and hybrid cloud solutions, exemplified by its acquisition of Red Hat and its spinout Kyndryl. By leveraging partnerships, like the one with Meta to integrate the Llama 2 AI model into Watsonx, IBM aims to be a leading AI software implementer in the enterprise sector. The company's recent EPS beat and strong outlook signal a transformation that could justify a higher P/E multiple. IBM's Q4 EPS of $3.87 surpassed expectations and showed progress in AI, with a doubling of its Watsonx-related business quarter-over-quarter. Despite a high dividend payout ratio of 80%, IBM’s open-source model allows for a more capital-efficient operation. Trading at 18.61 times forward earnings – below the industry average and Accenture's 30.38 times – if IBM can achieve its stated mid-single-digit revenue growth, its P/E could align closer to the sector average or Accenture's, implying a significant share price upside. Hence, the stock is seen as a buy with the potential for growth in AI adaptation through its strategic focus on open source and hybrid cloud technology.
Read the full article here. Read time: 6 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ Citigroup ($C) [51%]
🟨🟨⬜️⬜️⬜️ Currency Exchange International ($CURN) [27%]
🟥⬜️⬜️⬜️⬜️ Old Republic ($ORI) [22%]
Your comments:
🏦 cosmi*** ($C): Of course, I love anything with a Buffett endorsement, but I also like that they are re-structuring their management and trimming the fat.
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 80% bullish
The one red day was quickly followed by a (slightly) green day. A little bit of a surprising green day as much of big tech and the big semiconductor stocks were red and those have been driving the market for a while now. Yellowbrick Road Readers, the indexes, and the Fear v Greed index all remained bullish, but the news can’t seem to get above the 7-day average.
STOCK MARKET NEWS
Attention Gmail Users: Gmail (and a few other email clients) cut off long emails and will cut off this email soon. You can read the rest of the email on the website by clicking the button below.
* If you don’t want any more of these emails, unsubscribe here.
Eli Lilly results blow past estimates on strong Zepbound launch, higher Mounjaro prices - CNBC
Spotify's monthly user growth, subscribers beat expectations - Reuters
Adam Neumann is trying to buy bankrupt WeWork, DealBook reports - CNBC
ESPN, Fox and Warner Bros. Discovery to launch joint sports streaming platform this year - CNBC
Snap plunges on revenue miss and light guidance, as Middle East conflict creates 'headwind' - CNBC
Ford tops fourth-quarter estimates, guides toward strong 2024 - CNBC
Chipotle earnings crush estimates as restaurant traffic grows 7.4% - CNBC
Credit card delinquencies surged in 2023, indicating 'financial stress,' New York Fed says - CNBC
BIGGEST INSIDER PURCHASES
The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
Warren Buffett at OCCIDENTAL PETROLEUM CORP /DE/ ($OXY) purchased 4,302,320 shares at $57.15/share ($245.88M total) which increased their holdings by 1.3%. Their median purchase size is $78.73M and this is their 25th largest purchase out of 80 all time (link)
10% Owner at SONIDA SENIOR LIVING, INC. ($SNDA) purchased 1,052,630 shares at $9.50/share ($10.00M total) which increased their holdings by 120.9%. Their median purchase size is $232K and this is their 1st largest purchase out of 37 all time (link)
Director at Super Micro Computer, Inc. ($SMCI) purchased 2,000 shares at $568.00/share ($1.14M total) which increased their holdings by 4.9%. Their median purchase size is $329K and this is their 1st largest purchase out of 8 all time (link)
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
If you like this quiz section, then you are probably like me and love to learn! One way I learn is by using Shortform. They are a website/app that creates summaries/guides for 1000s of nonfiction books and connects ideas between books. Whenever I have a free 10 minutes, I just open their app and learn something new from a book about finance, business, history, etc.
I’ve been lucky enough to partner with them and offer you a free trial and a 20% discount if you use my link: https://shortform.com/yellowbrickroad
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 (20% off using my link!).
What was LTCM's primary trading strategy, focusing on the relationship between the prices of bonds? |
Yesterday’s Question: Which future Nobel Prize winner, famous for co-creating an option-pricing model named after him, was recruited by Meriwether as a founding employee at LTCM?
Answer: Myron Scholes, one of the discoverers of the Black-Scholes model.
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
* Sponsored link
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
kmone**** (73 points)
j.l.mo*** (73 points)
zd.wil**** (73 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
If you enjoy the Yellowbrick Road newsletter, please share it with a friend :). Plus, you’ll get points for the Weekly Tournament!
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! |
Reply