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Top stock pitches (Mon, Apr 15)

Top stock pitches (Mon, Apr 15)

Connor Van Ooyen
April 15, 2024

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👋 Good Morning!

I hope you had a great weekend.

The Nike CEO blames remote work for their lack of innovation (link); a stock pitch for a lagging semiconductor company with 50%+ upside (stock pitches); somehow JP Morgan and Citigroup both had strong earnings due to interest income strength but Wells Fargo fell due to lower interest income (news section); the news sentiment 7-day average falls below zero for the first time since we’ve started tracking it (news section); and a CEO with 70% 1-year returns bought more stock (insider trade section).

This is the Yellowbrick Road email where I share the best stock pitches from billion-dollar hedge funds, professional analysts, millionaire investors, and more!

Thanks for reading! 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

BLOG POST

Pernas Research Speculative Position Initiated On: Centrus Energy Corp.

Centrus Energy Corp. supplies nuclear fuel components and services for the nuclear power industry in the United States, Belgium, Japan, and internationally. The company operates through two segments, Low-Enriched Uranium (LEU) and Technical Solutions

Ticker: LEU | Price: $44.18 | Price Target: N/A
Market Cap: $692M | Timeframe: N/A

🔋 Uranium | 📈 Bullish Idea

* If you missed my interview with Pernas Research, read it here. Their stock pitches have averaged 80% 1-year returns so far.

Centrus Energy, the sole US uranium enrichment firm, presents a speculative investment opportunity. The company has received $700 million in government support for High Assay Low Enriched Uranium (HALEU) production and is well-positioned to benefit from rising nuclear energy demand driven by manufacturing, electric vehicles, and data centers. Centrus Energy trades at an EV/EBITDA of 8 with a market capitalization of $684 million at $43.70 per share. Risks associated with Russian uranium imports have diminished, further strengthening the company's prospects.

Read the full article here. Read time: 1 min

BLOG POST

Surgical Science: Leading Supplier of Medical Simulators and Software for Robotic Surgery

Surgical Science Sweden AB (publ) develops and markets virtual reality (VR) simulators for evidence-based medical training

Ticker: SUS.ST | Price: SEK 150.60 | Price Target: SEK 244.60 (+62%)
Market Cap: SEK 7.68B | Timeframe: N/A

🩺 Healthcare | 📈 Bullish Idea

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

Surgical Science Sweden AB, a leading medical simulation provider, has achieved a 39% CAGR between 2013 and 2023. The company has strong growth potential from partnerships with robotic-assisted surgery companies like Intuitive Surgical and Johnson & Johnson. Its high-margin licensing business, which accounts for two-thirds of the Industry/OEM segment revenue, grew by 24% year-over-year and has gross margins exceeding 90%. Surgical Science has no debt, an equity/asset ratio of 0.9x, and SEK 630 million in cash for potential mergers and acquisitions. The robotic-assisted surgery market is expected to reach $14 billion by 2026, growing at an 11% CAGR. The 22% free cash flow growth priced into the stock seems achievable given the tailwinds in robotic-assisted surgery and the upside potential in licensing. However, the company faces risks such as customer concentration and potential competition from big tech companies.

Read the full article here. Read time: 10 min

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VALUE INVESTORS CLUB

Marvell Technology, Inc. - $MRVL

Marvell Technology, Inc., together with its subsidiaries, provides data infrastructure semiconductor solutions, spanning the data center core to network edge. The company develops and scales complex System-on-a-Chip architectures, integrating analog, mixed-signal, and digital signal processing functionality

Ticker: MRVL | Price: $71.53 | Price Target: $111.29 (+56%)
Market Cap: $61.9B | Timeframe: N/A

⚡️ Semiconductors | 📈 Bullish Idea

Marvell Technology, Inc. (MRVL) is a leading enabler of AI, cloud computing, and 5G, but the stock has lagged due to cyclical weakness. The story is now turning with accelerating growth in the data center (optical, custom ASICs) and a cyclical recovery. The company has the potential to earn $4.00-4.50 in CY26 EPS, which could drive 50-70% upside at a 25x P/E multiple. Key drivers include AI driving networking intensity, a shift to custom silicon, and enterprise, carrier, and storage markets inflecting. Downside is protected at around 20x $3.25 normalized EPS.

Read the full article here (free login required). Read time: 9 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Roku ($ROKU) [52%]

🟨🟨⬜️⬜️⬜️ Cipher Pharmaceuticals ($CPH.TO) [31%]

🟥⬜️⬜️⬜️⬜️ Orchard Funding Group ($ORCH.L) [17%]

Your comments:

🧪 jbs43*** ($CPH.TO): Great TAM and already has the premier product
🧪 dcome*** ($CPH.TO): It has the most upside with demand soaring and an effective treatment
🎥 brano*** ($ROKU): Cipher play seems speculative on the consumer response to a potential breakthrough. The fraud activity in Orchard’s past is a nonstarter.

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 63% bullish

Well, well, well. Another flip flop in the market as we went from a very red day on Wednesday, to a green day on Thursday, and then back down significantly on Friday. The Fear v Greed index fell back into neutral territory for only the second time since last November and the news sentiment was bearish for the 3rd day in a row which drug the 7-day news sentiment average to a negative number for the first time all year.

We are also seeing the fewest number of stocks on the NYSE above their 50-day moving average in the last 5 months, the Dow Jones is now flat since February, and the Russell just fell into the red for 2024. Definitely don’t want to make any moves too soon and there is a very good chance the markets just flip right back to green, but things are starting to get quite interesting!

Stock Market News

JPMorgan's profit rises on interest income strength - Reuters

Wells Fargo shares fall as lower interest income cuts into profits - CNBC

BlackRock's first-quarter profit rises on higher fee income - Reuters

Citigroup tops estimates for first-quarter revenue on better-than-expected Wall Street results - CNBC

LinkedIn betting it can take on TikTok and Instagram in influencer marketing - CNBC

Nike bosses plan 'biggest' Olympics spend as marketing ramps up - Reuters

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

President and CEO at SMART Global Holdings, Inc. ($SGH)

The President and CEO purchased 10,000 shares at $18.79/share ($188K total) which increased their vested holdings by 1.1%. The current price is $19.44 (+3.5%). Their median purchase size is $188K and this is their 2nd largest purchase out of 3 all time. (trade link)