Top stock pitches (Fri, May 3)

Connor Van Ooyen
May 03, 2024

Ceragon Networks Ltd. - $CRNT

Ceragon Networks Ltd., together with its subsidiaries, provides wireless transport solutions for cellular operators and other wireless service providers in North America, Europe, Africa, the Asia Pacific, the Middle East, India, and Latin America.

Ticker: CRNT | Price: $2.84 | Price Target: $5.50 (+94%)
Market Cap: $241M | Timeframe: 18 months

🗼 Wireless Service | 📈 Bullish Idea

Ceragon Networks (CRNT), a wireless backhaul solutions provider, presents a compelling investment opportunity with an 18-month price target of $5.50 (83% upside) based on strong fundamentals and recent developments. The company has demonstrated impressive growth, with LTM revenue increasing 12% year-over-year and gross margins expanding by 300bps to 34%. CRNT secured a significant $150 million multi-year contract with a Tier 1 India operator and completed the accretive acquisition of Siklu Networks, which is expected to add $25-29 million in incremental revenue at higher gross margins. The company's innovative product introductions, including new competitive radio products and the upcoming Neptune System on a Chip, are expected to enhance its competitive advantage and drive further market share gains. With an improving balance sheet, near net cash position, and inflecting free cash flow, CRNT is well-positioned for future growth. Applying an 8x multiple to the midpoint of management's short- and long-term EBITDA guidance of $60 million yields a price target of $5.50 per share. While risks such as macro headwinds, international collections, and Israel's political instability persist, the company's strong growth and margin expansion outlook, coupled with potential catalysts such as the Siklu integration, capital deployment, and a possible takeout, make CRNT an attractive investment opportunity.

Read the full article here. Read time: 4 min

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FUND LETTER

Artisan International Fund Added On Portfolio Holding: BAE Systems plc

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence.

Ticker: BA.L | Price: GBp 1330 | Price Target: N/A
Market Cap: GBp 40.95B | Timeframe: N/A

🛩️ Defense | 🇬🇧 UK | 💰 2.2% 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

BAE Systems, a UK-based defense company, is well-positioned to benefit from the projected 45% increase in the EU defense budget to €350 billion amid rising geopolitical risks. The company's strong sales in advanced weapons systems, aeronautics, and security systems, coupled with its acquisition of Ball Aerospace to expand its civilian and defense capabilities in space, provide additional upside potential. Higher defense spending in Europe, Australia, and the United States is expected to further contribute to BAE's growth and stock price appreciation.

Read the full article here. Read time: 1 min

BLOG POST

Meta Platforms, Inc. – This sell-off is an opportunity

Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs.

Ticker: META | Price: $439.95 | Price Target: $531 (+21%)
Market Cap: $1.12T | Timeframe: 2025

📱 Social Network | 🤖 AI | 📢 Advertising | 📈 Bullish Idea

Meta reported Q1 results that beat expectations but provided a light Q2 guidance. Revenue grew 27% to $27.5 billion, operating margin was 38%, and EPS growth was 114%. Users increased 7% to 3.2 billion, with engagement and ARPU also rising. Reels now accounts for over 50% of time spent on Instagram. The company is focusing on AI, with multi-year infrastructure investments planned. Expense guidance has been revised upward, which may impact margins in the short term. Based on a P/E ratio of 23x applied to the FY25 EPS estimate, the price target is $531, implying an 11% CAGR.

Read the full article here. Read time: 8 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ DraftKings ($DKNG) [50%]

🟨🟨⬜️⬜️⬜️ Spar Group ($SGRP) [27%]

🟥⬜️⬜️⬜️⬜️ UFP Industries ($UFPI) [23%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 56% bullish

Yesterday was a relatively bullish day with all of the indexes closing green and the news sentiment jumping up above 0.5 (bullish). Yellowbrick Road readers also remain slightly bullish, but the Fear v Greed index actually fell a few points and is still in the Fear segment.

Also, you will note that once again, we see a Chinese stock in the biggest winners list.

Stock Market News

Peloton CEO Barry McCarthy to step down, company to lay off 15% of staff - CNBC

Obesity drugmaker Novo Nordisk's Q1 profit beats forecast - Reuters

ConocoPhillips misses quarterly profit estimates - Reuters

Oil giant Shell beats first-quarter profit estimates despite weaker gas prices - CNBC

Moderna loses less than expected as Covid vaccine sales beat estimates, cost cuts take hold - CNBC

Apple announces largest-ever $110 billion share buyback as iPhone sales drop 10% - CNBC

Etsy misses first-quarter sales, profit estimates on lower discretionary demand - Reuters

Not So Fastly. Shares Plummet On Lowered 2024 Revenue Guidance. - Investors Business Daily

Sony and Apollo send letter expressing interest in $26 billion Paramount buyout as company mulls Skydance bid - CNBC

Coinbase reports first-quarter revenue beat after bitcoin rally leads surge in profit - CNBC

Qualcomm jumps as AI sparks rebound in Chinese smartphone market - Reuters

Expedia lowers full-year revenue forecast on slow B2C growth - Reuters

FEATURED INSIDER TRADE

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EVP & CFO at HBT Financial, Inc. ($HBT)

The EVP & CFO purchased 1,100 shares at $18.93/share ($20,823.00 total) which increased their vested holdings by 4.6%. The current price is $18.96 (+0.2%). Their median purchase size is $44,660.00 and this is their 3rd largest purchase out of 3 all time. (trade link)

LINKS YOU’LL LOVE

Steve Jobs advice for choosing what to work on (link)

Exploring the airplane, walking, and being proactive (link)

Aswath Damodaran: The Dean of Valuation (link)

THAT’S ALL FOLKS

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Connor

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