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Top stock pitches (Mon, Aug 12)

Top stock pitches (Mon, Aug 12)

Connor Van Ooyen
August 12, 2024

In partnership with

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!

The three stock pitches you’ll read about in today’s email are:

Amazon (AMZN)

Leonardo S.p.a. (LDO.MI)

Zebra Technologies (ZBRA)

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

📢 IN CASE YOU MISSED IT 📢

3 new paid pitches… for FREE

One of the best Special Situation / Event-Driven investors let me peek behind their paywall and share 5 of their most profitable pitches and their 3 newest ones.

Click here to read the full post on Twitter/X and make sure to give it a like/repost.

Dalius (@InvestSpecial) is one of the best investors on here and an incredible source of special situations / event-driven ideas.
He let me take a look behind his paywall and see what I could find.
Here are 5 of his best pitches (and the 3 newest ones):
— Yellowbrick Investing (@joinyellowbrick)
1:57 PM • Aug 10, 2024

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.

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.

YB Premium Portfolio returns - started mid-May

STOCK PITCHES

Author Returns

The below stock pitch is from FluentInValue.

Their historic returns are:

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

BLOG POST - FluentInValue

Amazon.com, Inc. - $AMZN

Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally.

Ticker: AMZN | Price: $167.15 | Price Target: $245.05 (+47%)
Market Cap: $1.75T | Timeframe: N/A

📦 Ecommerce | ☁️ Cloud Computing | 📈 Bullish Idea

Amazon (AMZN) is a leader in e-commerce and cloud computing with diverse revenue streams, including online stores (40%), third-party sellers (24%), and AWS (16%). The company shows strong global growth, particularly in international markets, and solid financials with $574.8B revenue and 47.6% gross margin. Amazon's competitive advantages include brand power, patents, scale, switching costs, and network effects. The e-commerce market is projected to grow at a 19% CAGR through 2030, while cloud computing is expected to grow at 21.2% CAGR from 2024 to 2030. Amazon faces regulatory and competitive risks but maintains a robust cash position and efficient cost management. The company's future growth is estimated at 28-33% over the next five years. Currently trading at $189, Amazon appears undervalued compared to an average valuation of $245.05 based on DCF, multiple valuation, Benjamin Graham's valuation, and analyst estimates. Key risks include regulatory challenges, intense competition, and potential legal issues.

Read the full article here. Read time: 17 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7595/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from GreenWood Investors.

We have 11 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.

FUND LETTER - GreenWood Investors

GreenWood Investors Portfolio Holding: Leonardo S.p.a.

Leonardo S.p.a., an industrial and technological company, engages in the helicopters, defense electronics and security, aircraft, aerostructures, and space sectors in Italy, the United Kingdom, rest of Europe, the United States, and internationally.

Ticker: LDO.MI | Price: 21.65 | Price Target: N/A
Market Cap: 12.50B | Timeframe: N/A

🛩️ Aerospace/Defence | 🇮🇹 Italy | 📈 Bullish Idea

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

Leonardo S.p.a. (LDO.MI) recently unveiled its first capital allocation strategy under CEO Roberto Cingolani, aiming to transform from an industry laggard to a leader in order book, revenue, and operating profit performance. The company's 5-year plan does not fully reflect the impact of the Ukraine war on government customers, with the Italian government considering orders that could exceed its annual defense expenditures. These large orders, of which Italy represents a small portion, are largely not included in the current 5-year plan. Leonardo anticipates adding share repurchases to its capital allocation strategy, providing comfort to investors while the stock remains the cheapest in the industry. With board representation for over a year and an expected 10+ year tailwind in the defense sector, the company's management is more optimistic than ever about its future prospects.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/10790/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from Spruce Point Capital Management.

We have 5 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.

FUND LETTER - Spruce Point Capital Management

Spruce Point Capital Management Issues 'Strong Sell' Research Opinion On Zebra Technologies Corp. (Nasdaq: ZBRA) With 65%-80% Downside Risk Potential

Zebra Technologies Corporation, together with its subsidiaries, provides enterprise asset intelligence solutions in the automatic identification and data capture solutions industry worldwide.

Ticker: ZBRA | Price: $319.95 | Price Target: $110 (-66%)
Market Cap: $16.50B | Timeframe: N/A

💻 Automatic Identification Software | 📉 Bearish Idea

Spruce Point Capital Management issues a bearish report on Zebra Technologies (ZBRA), estimating 65-80% downside risk with a price target of $62.90-$110. The report highlights competitive pressures in Zebra's core hardware, services, and software offerings, with hardware sales growing only 1.3% CAGR from 2019-2023 and margins contracting 360bps. Zebra's $2.1 billion acquisition spree is characterized as a failure, with concerns about the performance of acquired companies like Fetch Robotics, Antuit.ai, and Matrox Imaging. The report raises accounting concerns, noting inventory reclassifications and the CAO's comfort with 'gray areas.' Management misalignment is highlighted, including the Board's entrenchment and declining insider ownership. Spruce Point questions Zebra's valuation premium and ambitious 5-7% organic growth target, citing slowing growth in services and software, exposure to struggling retail clients like Walgreens, and potential challenges in attracting talent due to below-average wages.

Read the full article here. Read time: 9 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/10822/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ American Express (AXP) [56%]

🟨🟨⬜️⬜️⬜️ Hello Group Inc. (MOMO) [28%]

🟥⬜️⬜️⬜️⬜️ Information Services Group (III) [16%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 60% bearish

Stock Market News

E.l.f Beauty sales jump 50% on gains in color cosmetics and skincare, launch of Bronzing Drops serum - CNBC

Sweetgreen Revenue Jumps as Salad Chain Adds Locations - Investopedia

Exclusive: Cisco to lay off thousands more in second job cut this year, sources say - Reuters

Activist Starboard Value Takes Stake in Starbucks - WSJ

Netflix teams up with CBS Sports to produce Christmas Day NFL games - Reuters

U.S. crude oil on pace for 4% weekly gain after stock market rebound - 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

Chief Executive Officer at Red Rock Resorts, Inc. ($RRR)

The Chief Executive Officer purchased 134,000 shares at $53.20/share ($7.13M total) which increased their vested holdings by 0.3%. The current price is $49.66 (-6.7%). Their median purchase size is $3.52M and this is their 4th largest purchase out of 16 all time. link

Note: 3 other insiders also purchased the stock. The stock is up 6% since I shared it in Tuesday’s CEO Watcher Premium email

LINKS YOU’LL LOVE

Top insider trades from last week

How Peter Lynch 11x’ed his money over 10 years

Joel Greenblatt special situations class notes

By @QCompounding on Twitter

🎁 REFERRAL PROGRAM 🎁

Use your unique URL below or the share URL for any of the stock pitches to unlock insanely valuable awards.

Premium members have access to these awards here.

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.

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Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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