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Top stock pitches (Fri, May 17)
Connor Van Ooyen
May 17, 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!
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).
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).
STOCK PITCHES
Author Returns
The below stock pitch is from Riverwater Partners.
We have 122 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
Riverwater Sustainable Value Strategy Company Deep Dive: Atkore Inc.
Atkore Inc. engages in the manufacture and sale of electrical, mechanical, safety, and infrastructure products and solutions in the United States and internationally. The company offers conduits, cables, and installation accessories.
Ticker: ATKR | Price: $154 | Price Target: N/A
Market Cap: $5.68B | Timeframe: N/A
🏭 Electrical Component Manufacturer | 📈 Bullish Idea
Atkore Inc. (ATKR), an electrical component manufacturer, is well-positioned for growth in the solar, data center, and EV markets, with revenue growing at a 13.9% CAGR and gross margins expanding nearly 10% over the past five years. The company's strong execution, product innovation, successful acquisitions, and prudent capital allocation have led to a new $0.32 quarterly dividend with room for growth. Despite COVID-related demand concerns, ATKR's pricing power and M&A strategy suggest these fears are overblown. With 2024 EPS guidance of $17 compared to pre-COVID levels of less than $5, ATKR trades at a discount to peers, presenting an opportunity for upside through growth and re-rating.
Read the full article here. Read time: 2 min
Author Returns
The below stock pitch is from GoBills42 on Value Investors Club.
Their historic returns are:
Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.
VALUE INVESTORS CLUB
eXp World Holdings, Inc. - $EXPI [short]
eXp World Holdings, Inc., together with its subsidiaries, provides cloud-based real estate brokerage services for residential homeowners and homebuyers. The company operates through North American Realty, International Realty, Virbela, and Other Affiliated Services segments.
Ticker: EXPI | Price: $12.87 | Price Target: $3 (-76%)
Market Cap: $1.92B | Timeframe: 2026
🏠 Real Estate Brokerage Service | 💰 1.6% Dividend | 📉 Bearish Idea
eXp World Holdings (EXPI), a cloud-based real estate brokerage, faces significant risks due to the recent National Association of REALTORs (NAR) settlement that eliminates the requirement for listing brokers to offer upfront compensation to buyer's agents through the Multiple Listing Service (MLS). With over 50% of eXp's revenue generated from buy-side transactions, the company is expected to experience a material impact on its business model, resulting in lower revenue from buy-side transactions and a reduced take rate per transaction. This, combined with the potential exit of lower-producing brokers and the capping of commissions for top-producing agents, is expected to lead to a $700m revenue headwind in 2025 and a $775m headwind in 2026. As a result, the company's revenue and EPS estimates are significantly below consensus, with revenue of $3.79B in 2025 (vs. $5.13B consensus) and adjusted EPS of ($0.12) in 2025 and $0.20 in 2026 (vs. $0.29 consensus in 2025). Additional risks include the potential for top agents to leave due to the significant drawdown in the company's stock price, new competitors entering the market, and the possibility of a higher-than-expected NAR settlement payment. With a price target of $3 at 15x 2026E $0.20 EPS, the stock faces a 70% downside risk.
Read the full article here (free account required). Read time: 8 min
Author Returns
The below stock pitch is from @smantel.
Their historic returns are:
Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.
Sensus Healthcare Surges with Impressive Q1 Performance and Expansion Plans
Sensus Healthcare, Inc., a medical device company, manufactures and sells radiation therapy devices to healthcare providers worldwide. The company uses superficial radiation therapy, a low-energy X-ray technology in its portfolio of treatment devices.
Ticker: SRTS | Price: $6.45 | Price Target: $10 (+55%)
Market Cap: $86.72M | Timeframe: N/A
🩺 Medical Devices | 📈 Bullish Idea
Sensus Healthcare (SRTS), trading at $5.30, offers a medical radiation therapy device for treating non-melanoma skin cancer and keloids, boasting a 99.1% cure rate and FDA approval. The company reported strong Q1 results with sales up 260%, revenue up 313%, and a gross margin of 62.5%. Management expects Q2 to be as good or better and has introduced a subscription model to increase revenue retention. The company filed for FDA approval of a new Transdermal Infusion Product and plans to expand into new sales geographies. With an expected EPS of $0.50 in 2024 and $0.65 in 2025 on sales of $40M and $50M, respectively, SRTS trades at an attractive '25E P/E of 8.2x and EV/EBITDA of 4.8x. Given the strong growth prospects and reasonable valuation, the stock has the potential to reach $10, implying a '25E P/E of 15.4x and EV/EBITDA below 10x.
Read the full article here. Read time: 2 min
Which stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ iHuman Inc. ($IH) [36%]
🟨🟨⬜️⬜️⬜️ Instacart ($CART) [34%]
🟥⬜️⬜️⬜️⬜️ Microstrategy ($MSTR) [30%]
Your comments:
🛢️ burkh*** ($CVE): CVE looks good but Canada taxes distributions in taxable accounts. I'll buy it in an IRA
MARKET OVERVIEW / NEWS
Market Overview
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 54% bullish
The market decided to take a little breather after a strong first half of the week. The Biggest Winners’ List is dominated by Chinese companies while GameStop leads the Biggest Losers’ List for the second day in a row. While the markets were red, the sentiment remained fairly bullish with the News Sentiment being slightly bullish, Yellowbrick Road readers being slightly bullish, and the Fear v Greed index remaining at “greed” levels.
Stock Market News
Under Armour is laying off workers as retailer says North America sales will plunge this year - CNBC
Canada Goose beats estimates as North America recovers, shares surge - Reuters
GameStop, AMC slide as meme stocks rally loses steam - Reuters
China's Baidu beats quarterly revenue estimates on ad recovery, cloud demand - Reuters
US manufacturing output unexpectedly falls in April - Reuters
Singapore Airlines CEO says travel out of China not yet recovered - Reuters
Wayfair to open its first large store, as physical locations make a comeback - CNBC
FEATURED INSIDER TRADE
The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
Director at Biohaven Ltd. ($BHVN)
The Director purchased 15,000 shares at $34.19/share ($513K total) which increased their vested holdings by 0.9%. The current price is $37.08 (+8.4%). Their median purchase size is $1.50M and this is their 6th largest purchase out of 8 all time. (trade link)
Historic Returns
1m returns: 8% weighted | 16% median | 100% win rate (5/5)
3m returns: 32% weighted | 38% median | 100% win rate (4/4)
6m returns: 35% weighted | 35% median | 100% win rate (4/4)
1y returns: 66% weighted | 71% median | 100% win rate (3/3)
LINKS YOU’LL LOVE
THAT’S ALL FOLKS
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Connor
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