🟨 The Yellowbrick Road
Posts
Top stock pitches (Fri, Apr 12)

Top stock pitches (Fri, Apr 12)

Connor Van Ooyen
April 12, 2024

In partnership with

About // Sponsor YBR // Yellowbrick Website // Twitter

👋 Good Morning!

As has been the case all year, the market dip lasted roughly 10 seconds before flipping right back to green. I added 35 new stock pitches to the website yesterday and shared 6 stock pitches I’ve added to the database that have already returned over 100% in 2024 (link). ToffCap has been all over $DRX.TO which is up almost 50% in 3 months (link), Carmax ($KMX) had terrible earnings and was hit by a (not public) short report (link) causing it to be the biggest loser in the market yesterday and in today’s email I share a potential multibagger in toenail fungus that has been gaining steam on Twitter, Jassy is committed to cutting costs and investing in AI at Amazon, and much more!

Thanks for reading! Feel free to share this email with any other investors that may like it.

Connor (follow the Yellowbrick Twitter account - @joinyellowbrick)

* If you missed yesterday’s email, don’t forget to read it here

STOCK PITCHES

BLOG POST

Cipher Pharma - Potential Multibagger in Toenail Fungus - CPH.TO

Cipher Pharmaceuticals Inc. operates as a specialty pharmaceutical company in Canada

Ticker: CPH.TO | Price: CAD 9.08 | Price Target: CAD 24.78 (+173%)
Market Cap: CAD 20M | Timeframe: 2030

💊 Pharmaceuticals | 📈 Bullish Idea

* I recommend using Interactive Brokers (link) to trade international and OTC stocks if you can’t trade them in your current brokerage

Cipher Pharmaceuticals, trading under the ticker CPH.TO, is a nail fungus play that expects to disrupt the $80-90 million market by 2026 with its superior MOB-015 treatment, which has the potential to capture a 90% market share. The company has a cash pile for mergers and acquisitions and buybacks. The base case price target for 2030 is $24.78, representing a 17% compound annual growth rate, but there is huge upside potential if the market for nail fungus treatment grows from the current 20% treatment rate to 40-60% as MOB-015 cures the condition three times faster than existing treatments.

Read the full article here. Read time: 9 min

FUND LETTER

Saga Partners Portfolio Holding: Roku, Inc.

Roku, Inc., together with its subsidiaries, operates a TV streaming platform in the United states and internationally. The company operates in two segments, Platform and Devices. Its streaming platform allows users to find and access TV shows, movies, news, sports, and others

Ticker: ROKU | Price: $61.82 | Price Target: N/A
Market Cap: $8.77B | Timeframe: N/A

🎥 Entertainment | 📈 Bullish Idea

Roku's active accounts hit 80 million (160 million viewers), closing in on Netflix's 80 million US subscribers. The average viewer streams 4 hours per day on the platform. Roku reached profitability in 2023 (1 year early) as ad dollars recovered and costs were cut. The company is valued like a no-growth hardware business but is really a scaled connected TV operating system poised to take 15-30% of the $160 billion US TV advertising and subscription market, with 2x+ upside from international growth. At a 40% connected TV viewing share, Roku's current $8 billion market cap is very attractive.

Read the full article here. Read time: 7 min

*SPONSORED BY MAXAI ME

MaxAI.me - Do More Faster with 1-Click AI

Discover MaxAI.me, one of the top 50 GenAI apps of 2024!

Chat with the latest AI like GPT-4, Claude 3, and Gemini 1.5, all in one place. Perfect your writing anywhere with 1-click AI without copy-pasting. Save 90% of your reading & watching time with AI summaries. Reply 10x faster with AI on email, social media, and messaging web apps. Rapidly turn your visions into stunning images with AI art generators.

Join over 1 million productive users on MaxAI.me to get more done in less time!

BLOG POST

Orchard Funding Group PLC - A deeply discounted security trading at 49% of net current asset value with catalysts.

Orchard Funding Group plc, through its subsidiaries, provides insurance premium finance, professional fee funding, finance, and secured property lending services in the United Kingdom. It operates in two segments, Standard Lending and Toyota Products.

Ticker: ORCH.L | Price: GBp 22.50 | Price Target: GBp 43 (+91%)
Market Cap: 4.7M | Timeframe: N/A

💸 Financing Firm | 💰 19% Dividend | 📈 Bullish Idea

* I recommend using Interactive Brokers (link) to trade international and OTC stocks if you can’t trade them in your current brokerage

Orchard Funding Group (ORCH.L) is a nanocap UK financing firm trading at 49% of net current asset value (NCAV) after a 33% pop on H1 results. The company provides insurance premium and professional fee funding. It has been hit by a 20% decline in the GAP insurance market and a £500,000 fraud provision. The CEO owns 54% of the company, which historically pays a 14% yield. The stock appears oversold due to the fraud, counterparty risk, and a major holder selling. At 43 pence per share, there is potential for 105% upside based on NCAV. H1 results hint at a tender offer and a focus on the discount to net asset value. The market capitalization is a tiny £4.5 million.

Read the full article here. Read time: 4 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ AT&T ($T) [60%]

🟨🟨⬜️⬜️⬜️ High Tide ($HITI) [23%]

🟥⬜️⬜️⬜️⬜️ Marufuji Sheet Piling ($8046.T) [17%]

Your comments:

📞 burkh*** ($T): High-yielding blue chip on sale? I'm in!

MARKET OVERVIEW / NEWS

Market Overview

Are you short-term bullish or bearish on the market?

Yesterday’s Poll Results: 55% bullish

Welp, it looks like yesterday was another head fake as the indexes (except the Dow Jones) went right back to green. The market is still jumping around the 21D EMA as investors are obviously concerned about inflation and the possibility of rate cuts continuing to be delayed, but the market continues to recover from every little dip incredibly quickly. The news sentiment remained slightly bearish, but Yellowbrick Road readers remain above 50% bullish and the Fear v Greed index bounced back up into the “Greed” range.

Stock Market News

Amazon CEO Andy Jassy says he's committed to cost cutting while investing in AI in shareholder letter - CNBC

CarMax's fourth-quarter profit falls nearly 27% - Reuters

Corona beer maker Constellation Brands forecasts annual profit above estimates - Reuters

Rent the Runway shares triple after upbeat revenue forecast on AI bet - Reuters

Nike Stock Rises Following Upgrade From Bank of America - Investopedia

Costco Hikes Its Dividend Nearly 14% as Sales Rise - Investopedia

Applied Digital misses quarterly revenue estimate amid power disruption at data center - Reuters

Fastenal Stock Drops After Earnings. The Issue Is ‘Poor Demand. - Barrons

Apple shares just had their best day since May - CNBC

BIGGEST INSIDER TRADES

The biggest insider trades are 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

CEO at NEOGEN CORP ($NEOG) purchased 23,000 shares at $12.36/share ($284K total) which increased their vested holdings by 17.8%. Their median purchase size is $300K and this is their 4th largest purchase out of 6 all time (link). 1 other insiders also purchased the stock

Director at NEXPOINT DIVERSIFIED REAL ESTATE TRUST ($NXDT) purchased 40,000 shares at $6.14/share ($246K total) which increased their vested holdings by 63.7%. Their median purchase size is $100K and this is their 6th largest purchase out of 20 all time (link)

President & CEO at AMERICAS CARMART INC ($CRMT) purchased 3,229 shares at $61.62/share ($199K total) which increased their vested holdings by 4.8%. Their median purchase size is $199K and this is their 1st largest purchase out of 1 all time (link)

LINKS YOU’LL LOVE

Exploring the light switch, same as ever, and others' opinions

A collection of lessons from Daniel Kahneman

The Most Offensively Taboo Idea in Western Civilization