Top stock pitches (Fri, Apr 5)

Connor Van Ooyen
April 05, 2024

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👋 Good Morning!

This is the Yellowbrick Road where I share the best stock pitches from billion-dollar hedge funds, professional analysts, millionaire investors, and more!

Our AI read and summarized 151 stock pitches, 1266 news articles, and 80 insider trades and found:

An aluminum wheel manufacturer with 100% upside (stock pitch)
Google plans to charge for AI-powered search engine (news)
Director at Avidity Biosciences with -50% returns sells their stock (insider trade)
and more…

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Connor (follow the Yellowbrick Twitter account - @joinyellowbrick)

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STOCK PITCHES

BLOG POST

PowerFleet Inc 'PWFL' and MiX Telematics 'MIXT' Merger

PowerFleet, Inc. provides wireless Internet-of-Things (IoT) asset management solutions in the United States, Israel, and internationally

Ticker: PWFL | Price: $4.57 | Price Target: $7 (+53%)
Market Cap: $183M | Timeframe: 12 months

🤖 IoT | 🤝 Acquisition | 📈 Bullish Idea

PowerFleet, Inc., an IoT company, is merging with MiX Telematics at approximately 4.5x EBITDA, enabling 20% recurring revenue growth. Management sees a $6-7 price target (currently $3), with the potential for a significant return if the company proves viable against giants like Samsara. The deal brings scale, synergies, and a unified offering, delevering from 17x to 1x debt/EBITDA. The new CEO and team are focused on growth. Shares are discounted by merger arbitrage.

Read the full article here. Read time: 9 min

VALUE INVESTORS CLUB

Superior Industries International, Inc. - $SUP

Superior Industries International, Inc., together with its subsidiaries, designs, manufactures, and sells aluminum wheels to the original equipment manufacturers and aftermarket distributors in North America and Europe. It offers its products under the ATS, RIAL, ALUTEC, and ANZIO brand names

Ticker: SUP | Price: $3.28 | Price Target: $13.44 (+310%)
Market Cap: $82M | Timeframe: 2025

🛞 Aluminum Wheels | 🏭 Manufacturing | 📈 Bullish Idea

Superior Industries International is a microcap aluminum wheel supplier trading at 4.4x 2023 EBITDA. Cost cuts of over $20 million in EBITDA and a working capital unwind are expected to drive $77 million in free cash flow in 2024, which is 1.2x the current market capitalization. Net debt is expected to decline rapidly, enabling the refinancing of 2025 notes and addressing the preferred stock. The bet is on record $205 million EBITDA in 2024 and over 300% equity upside by 2025 at 4.5x EBITDA. Risks include debt and volumes.

Read the full article here. Read time: 5 min

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BLOG POST

Exor - discounting excellent track-record?

Exor N.V., together with its subsidiaries, engages in the luxury goods, automotive, agricultural and construction equipment, commercial vehicles, and professional football businesses worldwide. The company designs, engineers, produces, and sells luxury performance sports cars under the Ferrari brand

Ticker: EXO.AS | Price: EUR 101.10 | Price Target: N/A
Market Cap: EUR 35B | Timeframe: N/A

💼 Conglomerate | 🇳🇱 Netherlands | 📈 Bullish Idea

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

Buying Exor today is like getting Ferrari at a 40% discount, Stellantis at 8x free cash flow, and the rest for free. Exor owns 22.9% of Ferrari and 14.2% of Stellantis. Ferrari generates €6 billion in revenue, with 27% EBIT and ROCE. Stellantis generates €189 billion in revenue, with 12% EBIT and 18% ROCE. Exor's net asset value is €150 per share, compared to its market capitalization of €103 per share. The discount exists despite Exor's focus on capital allocation, quality, and structural tailwinds, presenting an asymmetric investment opportunity.

Read the full article here. Read time: 5 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ ON24 ($ONTF) [52%]

🟨🟨⬜️⬜️⬜️ Cameco Corporation ($CCJ) [36%]

🟥⬜️⬜️⬜️⬜️ FY Group ($6807.TW) [12%]

Your comments:

📊 alpo*** ($ONTF): Valuation, net cash, and M/A possibilities

MARKET OVERVIEW / NEWS

Market Overview

The S&P index closed well below the 21-day EMA for the first time in over 6 months.

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

Yesterday’s Poll Results: 57% bullish

A brutal end of the day in the market with all of the indexes ending the day more than 1% in the red. The Fear v Greed index also tanked to less than 50 for the first time since mid-November. We even see one of the AI favorites, AMD, on the biggest losers list. I also added the S&P chart to show that it had a brutal red candle that closed well below the 21D EMA which a lot of people use to determine the trend of the market.

Yellowbrick Road readers and the news sentiment both remain slightly bullish, but I wouldn’t be surprised to see that flip tomorrow.

Stock Market News

Ford will delay some North American EV production - Reuters

Google plans to charge for AI-powered search engine, FT reports - Reuters

Alphabet reportedly weighing offer for HubSpot, sending shares in the $32 billion marketing company up 7% - CNBC

EV maker Nikola beats first-quarter deliveries estimates for hydrogen trucks - Reuters

Disney to start cracking down on password-sharing from June, CEO Iger says - Reuters

Dow drops 500 points after Fed officials spook investors with cloudy rate-cut outlook - New York Post

US layoffs reach 14-month high amid government, tech cutbacks - Reuters

Levi Strauss shares surge 18% on raised profit guidance, holiday earnings beat - CNBC

Lamb Weston Stock Sinks After Software Issue Affects Q3 Results, FY Outlook - Investopedia

Spotify plans to raise prices later this year: report - Fox Business

FEATURED INSIDER TRADE

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Director at Avidity Biosciences, Inc. ($RNA)

The Director sold 20,000 shares at $27.11/share ($542K total) which decreased their vested holdings by 6.9%. The current price is $26.64 (-1.7%). Their median sale size is $542K and this is their 8th largest sale out of 15 all time. (trade link)

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