Top stock pitches (Fri, Jun 7)

Connor Van Ooyen
June 07, 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!

Note: I am having issues with my domain that GoDaddy is working on, so if the internal links (i.e. the links that point back to the newsletter website for things like polls) still aren’t working, that is why. Hopefully, it will be fixed by the time you read this, but if not, it should be fixed for Monday’s email.

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:

International Money Express ($IMXI)

Monarch Cement ($MCEM)

NICE Ltd. ($NICE)

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

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.

New Trade Alert!

We just made a new investment in the YBR Portfolio and copied a trade from the #7 investor in our database who averages 42%+ 2-year returns on their stock pitches.

The new stock is…

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 (you get a 20% discount using that link or the button below).

WINNING PITCH

+94% returns in 2 months for pharma stock

ClearBridge nailed this stock pitch on $INSM in their Q1 fund letter (stock pitch link). $INSM recently shot up 100% after upbeat lung disease drug data.

The pitch was sent in the YBR Premium email (upgrade for 20% off) on April 12th when the stock price was $28.56. It’s up nearly 100% since then!

STOCK PITCHES

Author Returns

The below stock pitch is from Voss Capital.

We have 61 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. Upgrade for 20% off.

FUND LETTER - Voss Capital

Voss Capital Value Fund Portfolio Holding: International Money Express, Inc.

International Money Express, Inc., together with its subsidiaries, operates as an omnichannel money remittance services company in the United States, Latin America, Mexico, Central and South America, the Caribbean, Africa, and Asia.

Ticker: IMXI | Price: $21.02 | Price Target: $41.76 (+99%)
Market Cap: $683M | Timeframe: 2026

💸 Money Transfer Technology | 📈 Bullish Idea

International Money Express (IMXI), a money transfer company focused on the U.S. to Latin America corridor, has experienced temporary growth slowdown to 3-5% due to a strong Mexican Peso and high inflation, but maintains long-term growth potential from ongoing immigration trends, a recently launched digital app, and weak competition. Despite this, the company trades at an attractive valuation of under 5x EBITDA (8x FCF) with net cash on the balance sheet and has committed to significant buybacks of $20-$25 million per quarter, which has already reduced diluted shares outstanding from 39 million to 33 million. Management expects EPS to grow from $2.50 to $4.00 by 2026 (~30% CAGR), and with a 10x multiple, the stock has 100% upside potential. The company's cash balance peaks between Mondays and Wednesdays, which may cause the EV to optically drop nearly 20% overnight on screens over the next six quarters. Additionally, there is believed to be a valuation floor and private equity interest under $20 per share (4x EBITDA), as a slower-growing, lower-margin peer was recently acquired at 8x EBITDA.

Read the full article here. Read time: 2 min

Author Returns

The below stock pitch is from WinterGems.

We have 6 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. Upgrade for 20% off.

BLOG POST - WinterGems

$MCEM Monarch Cement: A superior cement business

The Monarch Cement Company engages in the manufacture and sale of portland cement in the United States. The company also provides masonry cement, ready-mixed concrete, concrete products, and sundry building materials.

Ticker: MCEM | Price: $195.50 | Price Target: $290.25 (+48%)
Market Cap: $492M | Timeframe: 5 years

🏗️ Building Materials | 📈 Bullish Idea

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

Monarch Cement ($MCEM), a $700M market cap pure-play cement company trading on the pink sheets, has seen its operating income from its single cement plant in Humboldt, Kansas, grow 11x in the last 10 years (27% CAGR) due to a 4x expansion in operating margin (from 10% to 40%), a 2x increase in volume, and a 1.5x increase in pricing. The company is projected to grow operating income at 12% annually over the next 5 years (5% pricing, 5% volume, 2% margin expansion) and returns ~3% to shareholders through dividends and buybacks. With no debt and $124M in cash/long-term investments, MCEM trades at an attractive 8.3x EV/EBIT. Key risks include cyclicality in the cement industry and potential cuts to infrastructure spending.

Read the full article here. Read time: 8 min

Author Returns

The below stock pitch is from Parnassus Value Equity Fund.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

FUND LETTER - Parnassus Value Equity Fund

Parnassus Value Equity Fund new position: NICE Ltd.

NICE Ltd., together with its subsidiaries, provides cloud platforms for AI-driven digital business solutions worldwide.

Ticker: NICE | Price: $169.76 | Price Target: N/A
Market Cap: $12.25B | Timeframe: N/A

☁️ Cloud Software | 📈 Bullish Idea

NICE Ltd. (NICE), a leading cloud contact center software company, is poised for double-digit revenue growth as customers increasingly adopt its AI-enabled customer experience solutions. Despite a strong moat and leadership position, NICE's stock has declined significantly from its 2021 peak due to softening demand post-COVID. However, the company has substantial upside potential as enterprises continue to embrace AI and cloud-based solutions, making the current stock price an attractive entry point for investors.

Read the full article here. Read time: 1 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Axon Enterprise, Inc. ($AXON) [48%]

🟨🟨⬜️⬜️⬜️ Sable Offshore Corp. ($SOC) [30%]

🟥⬜️⬜️⬜️⬜️ Kitwave Group ($KITW.L) [22%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 50% bullish

A fairly calm day except for the Russell which continues to underperform. Everyone appears to be waiting on the jobs report that is coming out and the Roaring Kitty livestream where he is doing something with his $GME holdings.

Yellowbrick Road readers are split between bearish and bullish, the news sentiment flipped back to negative, and the Fear v Greed index lost a couple of points but is still in neutral territory. Not much movement, but the sentiment was slightly more bearish.

Stock Market News

China's Nio expects Q2 EV sales to more than double - Reuters

Robinhood expands crypto efforts with $200M purchase of Bitstamp - Fox Business

The low-end consumer 'is really being stretched,' says Five Below CEO - CNBC

GameStop shares jump 30% as 'Roaring Kitty' schedules YouTube livestream for Friday - CNBC

Starbucks partners with food delivery platform Grubhub - Reuters

TSMC Shares Hit Record High as AI Demand Boosts Chip Industry - WSJ

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

Director at Northwest Bancshares, Inc. ($NWBI)

The Director purchased 12,000 shares at $10.68/share ($128K total) which increased their vested holdings by 24.0%. The current price is $10.75 (+0.7%). Their median purchase size is $51,999.50 and this is their 1st largest purchase out of 3 all time. (trade link)

LINKS YOU’LL LOVE

How Chewy rode the pandemic pet boom and built a huge subscription business

A quick and simple screen for finding quality stocks

10 takeaways from the book The Lessons of History

THAT’S ALL FOLKS

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 and share the newsletter with other investors if you find it useful!

Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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

or to participate.