Top stock pitches (Fri, Sep 6)

Connor Van Ooyen
September 06, 2024

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*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:

Green Plains Inc. (GPRE)

American Public Education, Inc. (APEI)

Okta (OKTA)

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

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STOCK PITCHES

Author Returns

The below stock pitch is from ToffCap.

We have 52 stock pitches from them in our database and their historic returns are:

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BLOG POST - ToffCap

Green Plains Inc: Eyes Potential Sale as Ancora Pushes for Valuation Above $50/Share.

Green Plains Inc. produces low-carbon fuels in the United States and internationally. It operates through three segments: Ethanol Production, Agribusiness and Energy Services, and Partnership.

Ticker: GPRE | Price: $13.60 | Price Target: $50 (+267%)
Market Cap: $879M | Timeframe: N/A

🛢️ Oil/Gas | 🚨 Special Situation | 📈 Bullish Idea

Green Plains Inc. (GPRE), currently trading at $14 per share, is facing pressure from activist investor Ancora to pursue a sale, with a potential valuation of over $50 per share. The company has hired financial and legal advisors to assist in a strategic review process. GPRE operates ethanol plants in the US and is developing various projects, including dry-grind dextrose capacity and carbon capture set to start in H2 2025. The company reported strong EBITDA outlook for Q3 and H2 2024, record corn oil and protein yields, and the world's largest MSCTM system becoming operational. GPRE is commissioning Clean Sugar Technology in Iowa and selling a terminal to repay debt. Notably, a Fortune 10 company has expressed interest in GPRE. The company's end markets have been volatile, potentially obscuring underlying asset values and creating investment opportunities in a sector that has seen significant M&A activity.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11353/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from @rubicon59.

Their historic returns are:

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

TWITTER - @rubicon59

APEI insider buying

American Public Education, Inc., together with its subsidiaries, provides online and campus-based postsecondary education and career learning in the United States.

Ticker: APEI | Price: $15.45 | Price Target: N/A
Market Cap: $273M | Timeframe: N/A

🧑‍🏫 Online Education | 🔄 Turnaround | 📈 Bullish Idea

American Public Education, Inc. (APEI) presents a promising turnaround opportunity, trading at 7x expected FCF for the year. An insider recently purchased $11 million worth of shares following a post-Q2 earnings dip. The company is currently valued below the cost of its 2021 Rasmussen acquisition, with the stock price at half its pre-acquisition level. APEI's core business has improved since 2021, with revenue up 20% and operating cash flow increasing 50%. If Rasmussen achieves modest profitability, it could potentially double the company's FCF. While Q2 results weren't stellar, there were significant year-over-year EBITDA gains. The improved core business and potential Rasmussen profitability may explain the insider's large share purchase. However, risks remain, and there are no guarantees of success. The current valuation of the entire company, including Rasmussen and the improved core business, is less than what APEI paid for Rasmussen alone in 2021.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11423/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from wallstengine.

Their historic returns are:

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

ANALYST REPORT - wallstengine

Evercore ISI Initiates Coverage on $OKTA with an Outperform Rating and $122 PT

Okta, Inc. operates as an identity partner in the United States and internationally.

Ticker: OKTA | Price: $74.50 | Price Target: $122 (+63%)
Market Cap: $12.69B | Timeframe: N/A

🪪 Identity | 💻 B2B SaaS | 📈 Bullish Idea

Evercore ISI initiates coverage on Okta (OKTA) with an Outperform rating and $122 price target. Despite strong F2Q results, the company provided soft 2H revenue and CRPO guidance, with net retention rate dropping to 110% and light customer additions. Margins and free cash flow improvements are offsetting macro headwinds, while governance and PAM progress is noted. The company is taking a prudent approach to guidance due to macro concerns and potential lingering effects from the October breach. Management increased FY topline growth to 13%, raised operating margins by 150bps to 21.1%, and increased FCF margins by 100bps to 23%. Despite near-term challenges, the analyst maintains an Outperform rating, citing attractive valuation for identity assets, which remain a top investment priority.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11416/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ VersaBank (VBNK) [45%]

🟨🟨⬜️⬜️⬜️ Hagerty (HGTY) [33%]

🟥⬜️⬜️⬜️⬜️ Lumen Technologies (LUMN) - short [20%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 58% bearish 📉

Stock Market News

Verizon to acquire Frontier Communications in $20 bln deal - Reuters

August private payrolls rose by 99,000, smallest gain since 2021 and far below estimates, ADP says - CNBC

JPMorgan top economist says the Fed should cut rates by a half point this month - CNBC

Layoffs jump in August while hiring in 2024 is at a historic low, Challenger report shows - CNBC

OPEC+ agrees to delay October oil output hike for two months - Reuters

LINKS YOU’LL LOVE

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Michael Mauboussin on the importance of position sizing.

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THAT’S ALL FOLKS

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Connor

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