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Top stock pitches (Mon, Jul 22)

Top stock pitches (Mon, Jul 22)

Connor Van Ooyen
July 22, 2024

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

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

👋 Good Morning!

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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:

CCC Intelligent Solutions (CCCS)

Allient Inc. (ALNT)

Alico (ALCO)

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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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).

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New Trade Alert!

We just sold out of one of our holdings for 93% gains in just a few months!

The sold stock is…

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STOCK PITCHES

Author Returns

The below stock pitch is from Brasada Capital.

Their historic returns are:

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

FUND LETTER - Brasada Capital

Brasada Capital Management Fund Porfolio Holding - CCC Intelligent Solutions Holdings Inc.

CCC Intelligent Solutions Holdings Inc., operates as a software as a service company for the property and casualty insurance economy in the United States and China.

Ticker: CCCS | Price: $11.19 | Price Target: N/A
Market Cap: $6.96B | Timeframe: N/A

💸 Insurance SaaS | 📈 Bullish Idea

CCC Intelligent Solutions (CCCS) is a dominant player in the automotive insurance software market, processing over 80% of US auto claims. The company's platform connects insurers, repair shops, and parts suppliers, streamlining the claims process. CCCS benefits from high returns on capital, durable growth, non-cyclical demand, and high customer retention. Its competitive moat is built on switching costs, network effects, and a significant data advantage. Growth opportunities include upselling existing customers, expanding diagnostics services ($300M potential), implementing straight-through processing (STP) automation, expanding into casualty claims, and developing a parts marketplace. Management guides for 7-10% organic growth, with an internal target of 15%. The stock is currently valued for 9% growth, offering upside potential to 13-15%. Key risks include market saturation and competition from Mitchell and Solera, though CCCS maintains a strong position due to its comprehensive offering and customer relationships. At the current price, investors can expect double-digit returns with minimal risk of permanent business value impairment.

Read the full article here. Read time: 10 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/6663/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from VC2020.

Their historic returns are:

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

VALUE INVESTORS CLUB - VC2020

Allient Inc. - $ALNT

Allient Inc., together with its subsidiaries, designs, manufactures, and sells precision and specialty controlled motion components and systems for various industries in the United States, Canada, South America, Europe, and Asia-Pacific.

Ticker: ALNT | Price: $27.39 | Price Target: $48.30 (+76%)
Market Cap: $460M | Timeframe: N/A

🔌 Electrical Equipment | 📈 Bullish Idea

Allient Inc. (ALNT), a niche industrial motion/power/controls company, trades at 9-10.7x normalized earnings with a $48.30 price target (22% IRR). The company boasts 20-25%+ returns on tangible capital, 4-5%+ organic growth, and diversified end markets (30% Medical/A&D, 44% Industrial). ALNT benefits from sticky customer relationships, high margins, and a strong position in growing automation and robotics markets. Management, led by owner-operator Dick Warzala (10% ownership), has a track record of successful acquisitions and organic growth. The company is undergoing a restructuring plan expected to yield $10 million+ in savings over two years. Risks include 2.35x net debt/EBITDA and potential demand slowdown, with a downside of ~20% to $23.2/share. Catalysts include end market recovery, progress on integrated solutions, and completion of the rationalization program. ALNT's valuation appears attractive compared to peers trading at much higher multiples, offering potential for multiple expansion as the company executes its growth strategy and simplifies its structure.

Read the full article here. Read time: 10 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/6665/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from The Mikro Cap.

We have 13 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.

BLOG POST - The Mikro Cap

Orange Is the New Black - Alico, Inc.

Alico, Inc., together with its subsidiaries, operates as an agribusiness and land management company in the United States. The company operates in two segments, Alico Citrus, and Land Management and Other Operations.

Ticker: ALCO | Price: $26.62 | Price Target: N/A
Market Cap: $203M | Timeframe: N/A

🧑‍🌾 Agriculture | 🍊 Orange Producer | 📈 Bullish Idea

Alico (ALCO), Florida's largest orange producer with 49,000 acres, is recovering from hurricanes and citrus greening disease. A new Tropicana contract offers 33-50% higher prices for 65% of production, while 2.2 million new trees planted since 2017 could boost output by 27%+. Trading at 0.72x P/TBV, Alico's land is worth ~$454M versus $113M on the balance sheet. The company has potential for land repurposing, especially the 4,500-acre Corkscrew Grove near Fort Myers. Management expects a return to 10 million boxes of production, last achieved in FY 2015. With fixed costs and locked-in pricing, profitability hinges on total pound solids sold. Risks include disease acceleration, Tropicana contract changes, input costs, and hurricanes. The stock offers significant downside protection through land value, with potential upside from improved operations and land monetization.

Read the full article here. Read time: 19 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/6690/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Madison Square Garden Sports Corp. ($MSGS) [46%]

🟨🟨⬜️⬜️⬜️ AerCap Holdings ($AER) [37%]

🟥⬜️⬜️⬜️⬜️ Accenture ($ACN) [17%]

Your comments:

🛩️ qagu*** ($AER): AER has the most compelling market analysis. The analysis is missing the corp's ability to scale to meet additional demand, and the current 98% asset utilization could suggest that they are at an upper limit, thus limiting future growth. I am already very familiar with ACN. MSGS has significant risk and questionable growth opportunity

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 55% bullish

Quite a bearish ending to the week as all of the indexes were red on Friday, Yellowbrick Road readers fell to only 55% bullish, the news sentiment had its most negative day in months, and the Fear v Greed index fell back below 50.

Stock Market News

CrowdStrike CEO apologizes for tech outage, says systems should be recovering -NBC - Reuters

Microsoft says it restored cloud services after they suffered outage - CNBC

AmEx's quarterly profit beats estimates on robust spending - Reuters

Activist Elliott reportedly has a significant stake in Starbucks, in talks with management - CNBC

UK retail sales fall by more than expected in June, ONS says - Reuters

SunPower stock collapses to nearly $1 as company halts leases, installations and shipments - CNBC

Berkshire sells around $1.48 bln Bank of America shares, filing shows - Reuters

Oil falls $1 a barrel with Gaza ceasefire in sight, easing supply fears - Reuters

Activist Starboard took a stake in Match. Here are steps the investor may take to help lift shares - 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

Director at US BANCORP \DE\ ($USB)

The Director purchased 10,000 shares at $44.99/share ($450K total) which increased their vested holdings by 280.8%. The current price is $44.41 (-1.3%). Their median purchase size is $96,667.30 and this is their 1st largest purchase out of 4 all time. link

LINKS YOU’LL LOVE

The Whit and Wisdom of Peter Lynch

Layers of Conviction – Soros and Druckenmiller shorting the pound

Lessons From 24 Years Of Operating: Bowl America, Inc. (BWL.A)

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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