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Top stock pitches (Mon, May 13)

Top stock pitches (Mon, May 13)

Connor Van Ooyen
May 13, 2024

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👋 Good Morning! I hope you had a great weekend.

Thanks for reading the Yellowbrick Road where I share the best stock pitches from fund letters, analyst reports, blogs, and more!

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

STOCK PITCHES

Author Returns

The below stock pitch is from Alta Fox Capital.

We have 4 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

High Visibility Profitability Inflection with >100% upside

REV Group, Inc., together with its subsidiaries, designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation.

Ticker: REVG | Price: $26.20 | Price Target: $47.20 (+80%)
Market Cap: $1.24B | Timeframe: FY2025

🚐 Specialty Vehicles | 📈 Bullish Idea

REV Group, Inc. (REVG), a leading U.S. manufacturer of fire trucks, ambulances, and RVs, presents an attractive investment opportunity with 115% upside potential to a $47.20 price target. The company benefits from the consolidation of the fire and ambulance industries, which feature local monopolies, inelastic replacement demand, and rational competition. Under new management since 2020, REVG has focused on integration and divestitures, positioning itself for robust pricing, demand, and margin improvements. Trading at just 4.5x FY26 EBITDA despite projections for 100% EBITDA growth, REVG is significantly undervalued compared to peers. With increased liquidity following a private equity exit, likely earnings upgrades, and potential index buying, REVG presents a low-risk, high-visibility opportunity for investors.

Read the full article here. Read time: 3 min

Author Returns

The below stock pitch is from moneytr33 on Value Investors Club.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

VALUE INVESTORS CLUB

Everest Group, Ltd. - $EG

Everest Group, Ltd., through its subsidiaries, provides reinsurance and insurance products in the United States, Europe, and internationally. The company operates through two segment, Insurance and Reinsurance.

Ticker: EG | Price: $382.93 | Price Target: $576.25 (+50%)
Market Cap: $16.56B | Timeframe: two years

💸 Reinsurer | 📈 Bullish Idea

Everest Group, a leading reinsurer trading at 1.2x book and 6x P/E, is poised for sustainable 15-20% ROEs due to accelerating casualty pricing, stable property-cat rates, higher attachment points, and rising portfolio yields (from 4.7% to 5.5%). The company's reserves have proven solid since a 2020 charge, and its smaller primary insurance segment is inflecting to underwriting profitability. With a low-risk 50% total return potential over the next two years as the valuation re-rates to >1.5x book, EG presents an attractive investment opportunity in an industry benefiting from higher interest rates and improved underwriting discipline post-Covid. The company's recent $1.5bn equity raise positions it well to capitalize on market dislocation, while its diversified business mix, tighter exclusions, and extreme recent property-cat pricing reduce its exposure to catastrophic losses.

Read the full article here (free account required). Read time: 4 min

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Author Returns

The below stock pitch is from Damien Conover (Morningstar analyst).

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

ANALYST REPORT

Pfizer Inc.: Solid Results Supported by Steady Tracking Toward $4 Billion in Cost Cuts

Pfizer Inc. discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally.

Ticker: PFE | Price: $27.95 | Price Target: $42 (+50%)
Market Cap: 160B | Timeframe: N/A

💊 Pharmaceuticals | 💰 6% Dividend | 📈 Bullish Idea

Pfizer, a wide-moat pharma giant, is undervalued as the market underappreciates the potential for margin expansion driven by $4 billion in cost cuts by the end of 2024. In Q1, sales grew 11% (excluding COVID-19 products), with the rare disease drug Vyndaqel up 66%. Risks include intensifying generics for Eliquis by 2026 and pressure on Prevnar from Merck's V116 vaccine. Despite lowering the fair value estimate to $42 due to lower-than-expected 2024 guidance, Pfizer's dividend remains secure. The company's strong balance sheet, reasonable investments, and largely fair shareholder distributions support a Standard Capital Allocation Rating. Cost-cutting measures and new drug launches are expected to drive future growth and mitigate the impact of patent losses.

Read the full article here. Read time: 8 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Masimo Corporation ($MASI) [43%]

🟨🟨⬜️⬜️⬜️ Clarus Corporation ($CLAR) [41%]

🟥⬜️⬜️⬜️⬜️ CrossingBridge ($ENDI) [16%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 58% bullish

A little bit of a mixed end to the week with the Russell and Nasdaq closing slightly red on Friday and the S&P and Dow Jones closing slightly green. Yellowbrick Road readers remain bullish (though slightly lower than at the beginning of the week) and we continue to see positive momentum in the news sentiment and the Fear v Greed index (which has now moved out of “fear” and into “neutral”).

Stock Market News

Novavax signs multibillion-dollar deal with Sanofi to commercialize Covid vaccine, develop combination shots - CNBC

Chinese EV maker Zeekr prices IPO at $21, at the top end of range, reports say - CNBC

OpenAI plans to announce Google search competitor on Monday, sources say - Reuters

TSMC Hammers April Sales Results on AI Chip Demand - Investopedia

Consumer sentiment tumbles as inflation fears surge, closely watched survey shows - CNBC

Sam Altman takes nuclear energy company 'Oklo' public to help power his AI ambitions - CNBC

Elon Musk says Tesla will spend $500 mln to expand charging network - Reuters

Sweetgreen shares soar 35% after company beats revenue expectations - CNBC

Planet Fitness is raising prices even as it warns customers are growing cost-conscious - CNBC

FEATURED INSIDER TRADE

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Senior Vice President at CEL SCI CORP ($CVM)

The Senior Vice President purchased 8,000 shares at $1.39/share ($11,120.00 total) which increased their vested holdings by 3.6%. The current price is $1.42 (+2.2%). Their median purchase size is $15,561.50 and this is their 2nd largest purchase out of 2 all time. (trade link)