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Top stock pitches (Mon, Jun 10)

Top stock pitches (Mon, Jun 10)

Connor Van Ooyen
June 10, 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!

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:

Alta Equipment Group ($ALTG)

Portillo's Inc. ($PTLO)

Arrow Electronics ($ARW)

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.

New Trade Alert!

We just made a new investment in the YBR Portfolio and copied a trade from the #7 investor in our database who averages 42%+ 2-year returns on their stock pitches.

The new stock is…

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 (you get a 20% discount using that link or the button below).

WINNING PITCH

+29% returns in 3 weeks for $XPOF

This Xponential Fitness ($XPOF) pitch from the May 20th email (link) is up almost 30% in 3 weeks.

Shoutout to @BeenThereCap for the killer pitch.

STOCK PITCHES

Author Returns

The below stock pitch is from Voss Capital.

We have 61 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. Upgrade for 20% off.

FUND LETTER - Voss Capital

Voss Capital Value Fund Portfolio Holding: Alta Equipment Group Inc.

Alta Equipment Group Inc. owns and operates integrated equipment dealership platforms in the United States. It operates through three segments: Material Handling, Construction Equipment, and Master Distribution.

Ticker: ALTG | Price: $8.38 | Price Target: $17.12 (+105%)
Market Cap: $292M | Timeframe: N/A

🏗️ Leasing Equipment | 💰 2.6% Dividend | 📈 Bullish Idea

Alta Equipment Group (ALTG) reported disappointing Q1 results, with weakness in its high-margin distribution segment and concerns about gross margin reversion in new construction equipment sales, causing the stock to fall ~30% to around 4x EBITDA. Despite lowering the top end of its full-year EBITDA guidance by less than 2%, the company's parts & service revenue has grown at a 43% CAGR since 2019, which should provide stability. As ALTG demonstrates better operating leverage, generates significant free cash flow (>30% levered FCF yield on 2025 consensus), and pays down debt, the stock has the potential to re-rate from its distressed valuation, with >100% upside to a base case fair value of 6x EBITDA.

Read the full article here. Read time: 1 min

Author Returns

The below stock pitch is from White Brook Capital.

We have 2 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. Upgrade for 20% off.

BLOG POST - White Brook Capital

Portillo's - Growing Money Trees ($PTLO)

Portillo's Inc. owns and operates fast casual restaurants in the United States. The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, char-grilled burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and chocolate cake shake.

Ticker: PTLO | Price: $10.10 | Price Target: $22 (+118%)
Market Cap: $623M | Timeframe: N/A

🌭 Fast Casual Restaurant | 📈 Bullish Idea

Portillo's (PTLO), an iconic Chicago-based fast-casual restaurant chain, is undervalued despite solid fundamentals and significant growth potential. The company's expansion strategy focuses on the Sunbelt region, with strong unit economics featuring $5-6 million store costs, 25-31% cash-on-cash returns (80% if landlord builds), and a potential for 850 units from the current 85. Recent stock weakness is attributed to transient factors such as tough January weather and the optical impact of newly opened stores on same-store sales. Portillo's unique menu offerings and operational improvements position it for accelerated EBITDA growth as scale improves. With Berkshire's selling pressure abating below 20% ownership and an attractive valuation at 15x EBITDA, the stock has a near-term price target of $22, with multi-bagger potential if growth continues.

Read the full article here. Read time: 12 min

Author Returns

The below stock pitch is from Bonhoeffer Capital Management.

We have 8 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. Upgrade for 20% off.

FUND LETTER - Bonhoeffer Capital Management

Bonhoeffer Capital Management Portfolio Holding: Arrow Electronics, Inc.

Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions.

Ticker: ARW | Price: $131.69 | Price Target: $558 (+324%)
Market Cap: $7.05B | Timeframe: 5 years

⚡️ Electronics Distributor | 📈 Bullish Idea

Arrow Electronics (ARW), the world's largest electronics distributor with a 15% market share, serves over 220,000 customers with a 90% retention rate and generates industry-leading 5.3% margins through value-added services. The company has five growth levers: market growth, new suppliers, operational improvements, deleveraging, and buybacks, which have enabled it to repurchase 50% of its shares over the past 10 years. ARW expects 5% organic growth and 14% EPS growth, benefiting from scale economies evident in its high margins compared to peers. Despite these strengths, the stock trades at a low valuation of 7x earnings compared to 15x earnings at a 5% growth rate. With a near-term price target of $256 and a long-term target of $558, ARW offers a potential 23% 5-year IRR.

Read the full article here. Read time: 7 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ International Money Express ($IMXI) [36%]

🟨🟨⬜️⬜️⬜️ Monarch Cement ($MCEM) [32%]

🟥⬜️⬜️⬜️⬜️ NICE Ltd. ($NICE) [32%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 47% bullish

The job report came in strong which cooled off the market and the Roaring Kitty GME livestream was full of nothing which caused $GME to plummet. The news sentiment flipped again from slightly bearish to slightly bullish while Yellowbrick Road readers flipped the opposite way (slightly bullish → slightly bearish) and the Fear v Greed index remained at the same level.

Stock Market News

Market backs off on hopes for interest rate cuts following strong jobs report - CNBC

Gold and Gold-Related Stocks Slump as Hot US Jobs Data Dampens Rate-Cut Hopes - Investopedia

U.S. job gains totaled 272,000 in May, more than expected - CNBC

Microsoft to double down on Game Pass at Xbox showcase with 'Call of Duty' title - Reuters

CrowdStrike, KKR, GoDaddy to join benchmark S&P 500 - Reuters

‘Roaring Kitty' YouTube livestream fails to lift GameStop stock as shares tank by 40% - New York Post

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 BOSTON OMAHA Corp ($BOC)

The Director purchased 10,000 shares at $13.80/share ($138K total) which increased their vested holdings by 30.5%. The current price is $13.90 (+0.7%). Their median purchase size is $138K and this is their 2nd largest purchase out of 4 all time. (trade link)