Top stock pitches (Mon, Sep 16)

ZipRecruiter (ZIP), a leader in the online job market, trades at 2x sales with an 89% gross margin and $77M in free cash flow over the trailing twelve months. The company has $500M in cash and is founder-led, with 30% insider ownership. Despite a 10% industry decline since 2019, ZIP's revenue has grown 12%, indicating market share gains. The company's flexible cost structure has allowed margin expansion even as revenue halved post-Covid boom. ZIP's revenue per business customer has grown 6x since 2016, demonstrating improved client relationships. Management projects 15% revenue growth, and if ZIP reaches $1B in revenue, it could potentially trade at 4-6x sales, suggesting a 4x upside in 2-3 years. The staffing services market is only 5-10% online, presenting significant growth potential as the industry shifts towards digital solutions. However, the lack of insider buying and cyclical nature of the business present risks to consider.

Read the full article here. Read time: 2 min

Remitly Global, Inc. (RELY), a digital payments app for cross-border money transfers, has experienced a 72% stock decline since its 2021 IPO but continues to gain market share in the remittance industry. The company's success is attributed to its flexible receipt options, including mobile wallet transfers, digital bank deposits, and cash pick-up or delivery, which cater to various country-specific payment preferences. Remitly offers lower costs compared to legacy providers like Western Union and employs localized marketing strategies, such as billboard ads and sports team partnerships in areas with large Hispanic populations. Its digital-native model allows for higher marketing spend, fueling growth and customer acquisition. Despite the stock drop, Remitly appears to be winning the innovator's dilemma in the remittance industry, particularly in North America, by leveraging its lower cost structure to outcompete traditional providers.

Read the full article here. Read time: 1 min

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

McBride plc (MCB.L), a leading European manufacturer of private label cleaning products, trades at 4.2x EV/EBITDA with a 24.6% ROIC. The company has recovered from recent inflation and supply chain challenges, benefiting from a consumer shift towards private label products. McBride is gaining market share in the growing white label segment, with its share increasing faster than the overall market expansion. The company has undergone restructuring efforts to improve efficiency, including cost-cutting measures, renegotiating sales agreements, and implementing an input cost hedging strategy. With improving asset turnover metrics, rising revenues and gross margins, and accelerating debt reduction, McBride targets an EBITDA margin of over 10%. The company's enterprise value could potentially trade at approximately 3x forward EBITDA on a three-year basis, suggesting significant upside potential.

Read the full article here. Read time: 5 min