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Top stock pitches (Mon, Aug 26)

Top stock pitches (Mon, Aug 26)

Connor Van Ooyen
August 26, 2024

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About // Sponsor YBR // Yellowbrick Website // Twitter

*This newsletter is for entertainment purposes only. Nothing in this newsletter is financial advice or recommendations.

Quick Announcement

If you tried to upgrade to Yellowbrick Premium this weekend or have had troubles logging in on joinyellowbrick.com / getting access to the premium sections of the site, that should be fixed now.

I had some AWS and database issues, but you should be able to upgrade to premium at auth.joinyellowbrick.com and login on the website and get access to the premium features now.

👋 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:

AstroNova Inc. (ALOT)

Citizens Financial Group (CFG)

Symbotic - short (SYM)

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).

**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

📢 IN CASE YOU MISSED IT 📢

25 hedge fund stock pitches

I shared 25 stock pitches from 25 different hedge fund Q2 letters on X this weekend.

Make sure to check it out if you haven’t already (and don’t forget to like/repost)!

Q2 fund letters are out and I've collected all of the new stock pitches. Here are 25 stock pitches from 25 different professional funds:
Have any favorites?
— Yellowbrick Investing (@joinyellowbrick)
3:38 PM • Aug 24, 2024

STOCK PITCHES

Author Returns

The below stock pitch is from Atai Capital.

We have 6 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 - Atai Capital

Atai Capital holding: AstroNova

AstroNova, Inc. designs, develops, manufactures, and distributes specialty printers, and data acquisition and analysis systems in the United States, Europe, Asia, Canada, Central and South America, and internationally.

Ticker: ALOT | Price: $14.69 | Price Target: N/A
Market Cap: $110M | Timeframe: N/A

🖨️ Printers | 📈 Bullish Idea

AstroNova Inc. (ALOT) experienced a 20% stock decline following a quarter with a 7% revenue decrease, attributed to one-time issues including supplier delays and a $4.5 million order pushout. Despite this, the company maintains its guidance for mid-single-digit organic growth and 13-14% EBITDA margins, with 100bps margin expansion expected annually for the next two years. ALOT recently acquired MTEX for $26 million, expanding its product lines and potentially benefiting from MTEX's technology and high margins. The company's EBITDA has doubled from $8M to $17M in less than two years, yet the stock price remains relatively flat. Management projects $30M+ EBITDA by 2026, with the stock currently trading at less than 5x EBITDA and 6x unlevered free cash flow. The acquisition, normalization of the Aerospace segment, and cost-saving initiatives are expected to drive future margin improvements.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11245/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from River Oaks Capital.

We have 22 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 - River Oaks Capital

River Oaks Capital Portfolio Holding: Citizens Financial Group, Inc.

Citizens Financial Group, Inc. operates as the bank holding company that provides retail and commercial banking products and services to individuals, small businesses, middle-market companies, corporations, and institutions in the United States.

Ticker: CFG | Price: $42.89 | Price Target: N/A
Market Cap: $19.23B | Timeframe: N/A

🏦 Community Bank | 💰 4% Dividend | 📈 Bullish Idea

Citizens Financial Group (CFG), a community bank in Atlanta, Georgia, presents an attractive investment opportunity with an $80 million market cap and over $90 million in cash. The company has executed well under CEO Cynthia Day, buying back 10% of shares, paying $3+ million in dividends, and lowering the efficiency ratio to below 50%. With a 20% free cash flow yield and trading at ~50% of ECIP-adjusted book value, CFG is significantly undervalued. The bank is seeking to acquire another minority-owned ECIP bank, potentially growing assets to over $1 billion and reaching a 25% free cash flow yield. This acquisition strategy aligns with the U.S. Treasury's ECIP program to consolidate sub-scale minority community banks. Even without an acquisition, CFG remains undervalued at its current price. Management's strong performance and receptiveness to shareholder suggestions make CFG an attractive investment in the minority-owned bank growth story.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11194/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from @bethanymac12.

Their historic returns are:

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

TWITTER - @bethanymac12

SYM’thing isn’t Right: Picking apart a Case of Misleading Disclosure

Symbotic Inc., an automation technology company, engages in developing technologies to improve operating efficiencies in modern warehouses.

Ticker: SYM | Price: $23.36 | Price Target: N/A
Market Cap: $13.68B | Timeframe: N/A

🏭 Warehouse Technology | 📉 Bearish Idea

Symbotic (SYM) appears significantly overvalued due to misleading disclosures and market misconceptions. The company has only 112 total Walmart systems versus the assumed 168, with 42 already started, suggesting peak revenue is near. Only about 20 of the reported 37 'deployments in progress' are actively installing. Evidence suggests revenue pull-forward through inventory procurement and potential acceptance issues at sites. The Street is likely double-counting recurring revenue in their valuation models. SYM's backlog includes 15 years of service revenue, inflating perceived contract value. The company is approximately 37% through its total Walmart system revenue, aligning with having started 42 out of 112 systems. SYM's valuation is extreme compared to peers, trading at 5.71x '25 EV/sales and 52x '25 EV/EBITDA versus peer Ocado at 1.10x and 14x respectively. The author expects SYM to miss Street revenue expectations by 15% in FY'2025 and 30% in FY'2026, with growth decelerating to mid-single digits by Q4'25.

Read the full article here. Read time: 26 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11234/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Spotify (SPOT) [39%]

🟨🟨⬜️⬜️⬜️ Boston Omaha Corp ($BOC) [32%]

🟥⬜️⬜️⬜️⬜️ OSB Group ($OSB.L) [29%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 54% bullish

Stock Market News

Fed Chair Powell indicates interest rate cuts ahead - 'The time has come for policy to adjust' - CNBC

Meta cancels plans for high-end mixed-reality headset, the Information reports - Reuters

Apple targets Sept. 10 debut for new iPhones, AirPods and watches, Bloomberg News reports - Reuters

China's robot makers chase Tesla to deliver humanoid workers - Reuters

Target's sales bounced back after closing crime-prone stores — and other chains could do the same - New York Post

How Google makes custom chips used to train Apple AI models and its own chatbot, Gemini - 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

CEO at Tourmaline Bio, Inc. ($TRML)

The CEO purchased 1,779 shares at $14.85/share ($26,418.15 total) which increased their vested holdings by 34.1%. The current price is $14.24 (-4.1%). Their median purchase size is $69,978.80 and this is their 4th largest purchase out of 4 all time. link

LINKS YOU’LL LOVE

Top insider trades last week

Markets are anti-inductive

A masterclass in building a consumer product, with concrete lessons on finding a hook, reaching & acquiring customers, and making sure you keep them (Bumble - $BMBL)

🎁 REFERRAL PROGRAM 🎁

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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

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