Top stock pitches (Fri, Aug 9)

Connor Van Ooyen
August 09, 2024

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

*This newsletter is for entertainment purposes only. Nothing in this newsletter is financial advice or recommendations.

👋 Good Morning!

Thanks for reading the Yellowbrick Road where I share the best stock pitches from fund letters, analyst reports, blogs, and more!

The three stock pitches you’ll read about in today’s email are:

American Express (AXP)

Hello Group Inc. (MOMO)

Information Services Group (III)

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

WINNING PITCH

+40% for Yellowbrick Premium Portfolio holding

Pernas Research is one of the best investors in our database and pitched $XMTR on July 1st when the stock price was $11.26.

Xometry just crushed earnings and is up 42% just one month later!

(We also copied this trade in the Yellowbrick Premium Portfolio and alerted Premium subscribers).

YBR PORTFOLIO

The YBR Portfolio copies the trades of the top 10 investors (based on the average returns of their previous stock pitches) in our database of 1,000+ investors. If you want to be alerted when the best investors buy/sell a stock, then this section is for you.

*All investments in the YBR Portfolio will be for ~3% of the portfolio value (which allows us to hold a maximum of 33 stocks at a time).

**I use Interactive Brokers (link) for the portfolio because it makes it easy to trade international and OTC stocks. If you decide to open an account with them, use this link so they know I sent you.

The YBR Portfolio is only available to Premium Subscribers. If you want to know which stocks the top investors are investing in, upgrade to Yellowbrick Premium.

YB Premium Portfolio - started mid-May

STOCK PITCHES

Author Returns

The below stock pitch is from Capitalist Letters.

We have 8 stock pitches from them in our database and their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

BLOG POST - Capitalist Letters

I Am Buying American: American Express

American Express Company, together with its subsidiaries, operates as integrated payments company in the United States, Europe, the Middle East and Africa, the Asia Pacific, Australia, New Zealand, Latin America, Canada, the Caribbean, and Internationally.

Ticker: AXP | Price: $233.54 | Price Target: $493 (+111%)
Market Cap: $166B | Timeframe: N/A

💸 Payments | 📈 Bullish Idea

American Express (AXP) is a high-quality stalwart with a closed-loop payment system that allows double capitalization on its user base, creating a giant moat. The company is inflation-proof and thriving in high-interest environments, as evidenced by its 38% YoY net income growth. AXP is expanding internationally and among younger demographics, with 60% of new consumer accounts in 2023 being Gen-Z and millennial. The company has shown consistent growth, with revenue increasing 45% in the last 4 years and a median ROE of 29% over the past decade. Based on conservative estimates, the price target is $382, offering a 10% annual return, while a more optimistic scenario yields a $493 target. The stock is considered fairly valued at current levels, with the author buying now and planning to buy more if the price decreases. AXP is seen as a foundational stock in a barbell portfolio, offering potential for above-market returns due to its strong business economics and giant moat.

Read the full article here. Read time: 10 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7433/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from nVariant.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

BLOG POST - nVariant

My current favorite stocks - Hello Group Inc.

Hello Group Inc. provides mobile-based social and entertainment services in the People’s Republic of China.

Ticker: MOMO | Price: $6.73 | Price Target: $25 (+271%)
Market Cap: $1.25B | Timeframe: N/A

📱 Online Dating | 🇨🇳 China | 📈 Bullish Idea

Hello Group Inc. (MOMO), known as the 'Tinder of China,' trades at a PE of 6 with a current price of $6.80 per share. The company has $7.37 per share in net cash, making it undervalued at current levels. MOMO has demonstrated shareholder-friendly management by consistently paying dividends ($700M over 5 years) and conducting share buybacks, particularly when the stock is below $6. The current dividend yield is 8%, providing a strong catalyst along with the buybacks. Despite facing challenges from competition, regulation, and declining revenues, MOMO remains profitable through skillful headcount reduction. The company's financial strength is evidenced by its substantial cash flows and dividend payments. Risks include the VIE structure, currency fluctuations, and revenue decline. However, the combination of profitability, shareholder-friendly management, and strong cash flow support a price target range of $15-$25 per share.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7465/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Rewey Asset Management.

We have 7 stock pitches from them in our database and their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

FUND LETTER - Rewey Asset Management

Rewey Asset Management Portfolio Holding: Information Services Group, Inc.

Information Services Group, Inc., together with its subsidiaries, operates as a technology research and advisory company in the Americas, Europe, and the Asia Pacific.

Ticker: III | Price: $3.24 | Price Target: $6 (+85%)
Market Cap: $158M | Timeframe: N/A

💻 IT Services | 🔄 Turnaround | 📈 Bullish Idea

Information Services Group (III), a technology research and advisory firm, has seen its stock price decline 26.03% to $2.94 due to clients delaying large IT implementation and transformation projects amid economic concerns and AI growth. Despite the slowdown, III anticipates a rebound in project work and employee utilization throughout 2024, with no significant project cancellations reported. The company has maintained its workforce to meet expected future demand and remains committed to its 17% EBITDA margin goal for late 2025. Currently trading at approximately 7x EBITDA with a 6.16% yield, III continues to repurchase shares and presents potential value to investors. The company has set a price target of $6.00, suggesting significant upside potential from its current trading price.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7332/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Monday.com (MNDY) [45%]

🟨🟨⬜️⬜️⬜️ iLearningEngines (AILE) [28%]

🟥⬜️⬜️⬜️⬜️ Webster Financial Corporation (WBS) [27%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 52% bullish

Stock Market News

Eli Lilly blows past estimates, hikes guidance as Zepbound, Mounjaro sales soar - CNBC

Palantir to deploy AI products on Microsoft Azure for U.S. government agencies - Reuters

Bumble dives as revenue forecast cut triggers worries over turnaround - Reuters

Monster Beverage misses quarterly sales estimates as economic fears slow demand - Reuters

Weekly jobless claims fall to 233,000, less than expected, in a positive sign for labor market - CNBC

Expedia beats second-quarter profit estimates on sustained international travel demand - Reuters

E.l.f Beauty sales jump 50% on gains in color cosmetics and skincare, launch of Bronzing Drops serum - CNBC

Burger King sales slump as customers pull back on fast food spending amid inflation - New York Post

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

Chief Executive Officer at Red Rock Resorts, Inc. ($RRR)

The Chief Executive Officer purchased 134,000 shares at $51.34/share ($6.88M total) which increased their vested holdings by 0.3%. The current price is $53.73 (+4.7%). Their median purchase size is $4.36M and this is their 5th largest purchase out of 17 all time. link

Note: 1 other insider also purchased the stock

LINKS YOU’LL LOVE

The Future Of Common Stocks

Every Book Charlie Munger Has Ever Recommended At The Berkshire Hathaway Annual Meeting.

The Volkswagen short squeeze of 2008 and how Porsche took control

By @QCompounding on X

🎁 REFERRAL PROGRAM 🎁

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THAT’S ALL FOLKS

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Connor

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