Top stock ideas (Thu, Mar 14)

Author

Connor Van Ooyen
March 14, 2024

👋 Good Morning!

This is the Yellowbrick Road where I share the best stock ideas from billion-dollar hedge funds, professional analysts, millionaire investors, and more!

Welcome to the 101 new readers who joined yesterday!

Our AI read and summarized 133 stock ideas, 1034 news articles, and 245 insider trades and found:

  • A niche vehicle manufacturer (such as aerial-work platforms and fire engines) with 80% upside (featured stock idea)

  • 3 bonus stock ideas

  • Adidas posts first loss in 30 years (news)

  • An insider with 90% returns buys the stock (insider trade)

  • and much more…

Thanks for reading! Have a great day.

Connor

* If you missed yesterday’s email, don’t forget to read it here

FEATURED STOCK IDEA

VALUE INVESTORS CLUB

Oshkosh Corporation - $OSK

Oshkosh Corporation provides purpose-built vehicles and equipment worldwide. The company operates through three segments: Access, Defense, and Vocational segment

Ticker: OSK | Price: $115.97 | Price Target: $210 (+81%)
Market Cap: $7.5B | Timeframe: N/A

🚒 Niche Vehicles | 📈 Bullish Idea

Oshkosh Corporation (Ticker: OSK), a diverse manufacturer of niche vehicles such as aerial-work platforms and fire engines, stands to benefit from increased infrastructure and non-residential construction activity. With the recent strategic acquisition of an airport equipment business complementing its existing segments, the company's earning power looks promising. Under new leadership since 2021, Oshkosh aims for a 2025 EPS target of $11-13, up from $7.83 in 2019. The company's access equipment segment, currently 70% of earnings but likely to normalize to 50-60% by 2026, already exceeds these targets. With a historical PE average of 13.7 and foreseeable EPS of $15+, a price target of $210 is projected—nearly double the current $110—bolstered by favorable government spending in infrastructure and inherent replacement demand. The stock's value proposition may soon gain recognition from the market, providing a catalyst for price appreciation.

Read the full article here. Read time: 4 min

+3 POINTS - WEEKLY TOURNAMENT

How do you rate the featured stock idea?

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Yesterday’s Featured Stock Idea

RTX Corporation ($RTX)

🟩🟩🟩⬜️⬜️ - Buy (60%)
🟥⬜️⬜️⬜️⬜️ - Pass (8%)
🟨🟨⬜️⬜️⬜️ - Watchlist (32%)

  • ✅ alpo*** - On sale due to a one-time event

  • ✅ burkh*** - Great company, held it for years. The two wars going on now are using up the world’s stockpile of missiles. Raytheon makes many of those, and they will be making the replacements.

There are 3 more stock ideas after “Today’s Sponsor”

TODAY’S SPONSOR

+15 POINTS - WEEKLY TOURNAMENT

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BONUS STOCK IDEAS

BLOG POST

ASANA – The World’s Largest Ever Insider Purchases

Asana, Inc., together with its subsidiaries, operates a work management platform for individuals, team leads, and executives in the United States and internationally

Ticker: ASAN | Price: $16.26 | Price Target: N/A
Market Cap: $4.2B | Timeframe: N/A

💼 Work Management | 💻 SaaS | 📈 Bullish Idea

Asana Inc. (NYSE: ASAN), led by high-profile Facebook co-founder CEOs, has seen CEO insider buys over USD 1 billion, with USD 166 million in 2023 alone, signifying confidence despite an 88% drop in stock price since its peak in 2021. A software company offering efficient work collaboration for about 140,000 paid customers, it's enjoyed a high margin with a promising market despite competition from bigger firms like Atlassian and new players like Monday.com. Asana went public via direct listing in 2020, which often lacks visibility but can be lucrative, evidenced by the CEO's massive purchases and the insider buying hinting at undervaluation. Despite substantial past growth, Wall Street predicts a slowdown with 12% year-on-year growth to USD 725 million by 2025, an overvaluation at 5x revenue versus a fair 4.5x given its growth and margin prospects. However, Asana's potential for scaling profitably suggests it could be undervalued if it reaches a 20% growth trajectory and 30% net margins, possibly deserving 9x revenue. The company has a substantial cash reserve and significant upside, and while not immediately poised to reach its peak stock price, Asana remains an attractive watch as it progresses towards a critical mass for profitability.

Read the full article here. Read time: 8 min

ANALYST REPORT

BQE Water Inc.: Profitable & Growing Micro-Cap in the Water Treatment Industry

BQE Water Inc., a water treatment company, provides wastewater management and treatment solutions to the mining and metallurgical industry in Canada, the United States, Latin America, China, and internationally

Ticker: BQE.V | Price: CAD 37.25 | Price Target: CAD 55 (+48%)
Market Cap: CAD 44.6M | Timeframe: N/A

💧 Water Treatment Services | ⛏️ Mining | 🇨🇦 Canada | 📈 Bullish Idea

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

BQE Water Inc. (BQE:TSXV, BTQNF:OTC) specializes in water treatment services for the mining industry and is benefiting from the growth in recurring revenue, now over 30% of its proportional revenue, with expectations to reach 44% by 2025. The increasing environmental regulations and a new cycle of mining capital expenditures provide solid tailwinds for the company. BQE's EBITDA margins have improved significantly, reaching 22% in 2023 due to its asset-light model. Holding unique intellectual property for compliance with stringent discharge regulations and risk reduction, BQE is well-positioned to sustain its compound annual growth rates of 17% in revenue and 32% in EBITDA. With a robust balance sheet featuring $6.7M in cash, no debt, and tightly held shares, the company is undervalued, trading at 5.5x 2025E EBITDA versus peers at significantly higher multiples and acquisition averages of 15x EBITDA. Initiating with a BUY rating, we target a price of $55.00/share by 2025, applying a 9.0x multiple to 2025E EBITDA, and anticipate catalysts like financial results, new contracts, and potential share repurchases in 2024 to further drive value.

Read the full article here. Read time: 2 min

FUND LETTER

Ariel Fund Portfolio Holding: Adtalem Global Education Inc.

Adtalem Global Education Inc. provides workforce solutions worldwide. It operates through three segments, Chamberlain, Walden, and Medical and Veterinary. The Chamberlain segment offers degree and non-degree programs in the nursing and health professions postsecondary education industry

Ticker: ATGE | Price: $50.00 | Price Target: N/A
Market Cap: $1.9B | Timeframe: N/A

🧑‍🏫 Workforce Education | 📈 Bullish Idea

Adtalem Global Education Inc. (ticker: ATGE) recently experienced a boost after reporting a top and bottom-line earnings beat, which led to an increase in its full-year guidance. The company, which had seen several quarters of declining annual enrollment, reported a positive turn in total enrollment trends, mainly due to significant growth at Chamberlain and Walden. Moreover, revenue per student exceeded expectations, as ATGE effectively optimized program pricing and offered fewer discounts. Despite ongoing challenges with enrollment at its medical and veterinary schools, these issues seem to be temporary, as management has made the necessary adjustments to capitalize on the strong underlying demand by translating it into new student enrollments. While investors may still be wary about the immediate future, we are confident that ATGE is well-positioned to take advantage of the healthcare worker shortage in the United States. This is underpinned by its status as the preeminent provider of nursing degrees in the nation and its distinction as the largest producer of African American MDs, PhDs, and nurses in the country.

Read the full article here. Read time: 1 min

+3 POINTS - WEEKLY TOURNAMENT

Which bonus stock idea was the most compelling to you?

Login or Subscribe to participate in polls.

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ DataDog ($DDOG) [51%]

🟨🟨⬜️⬜️⬜️ Loma Negra ($LOMA) [33%]

🟥⬜️⬜️⬜️⬜️ Schott Pharma ($1SXP.F) [16%]

Your comments:

  • ⛏️ alpo*** ($LOMA): Insider ownership: operators have experience in successful mining operations, an option on the coming demand for copper

MARKET OVERVIEW

The Market Overview is powered by Koyfin (link). Koyfin is my personal Bloomberg terminal that doesn’t cost $2,000/month. It has all of the news, financials, watchlists, screeners, charts, etc that I need to be an informed investor. *I’ve partnered with them to give you a 20% discount if you use my link!

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

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Yesterday’s Poll Results: 56% bullish

A little bit of an iffy day in the market. The tech indexes were slightly down while the Dow Jones and Russell were slightly up. The Fear v Greed index remained at 69, Yellowbrick Road Readers remained slightly bullish, and the news sentiment fell a few points but is still slightly bullish. Investor sentiment seems to be wavering a little bit as they are unsure of what the market is going to do.

STOCK MARKET NEWS

Dollar Tree posts quarterly loss, incurs over $1 bln in charges on store closure plans - Reuters 

Eli Lilly taps Amazon Pharmacy to help deliver weight loss drug Zepbound, other medicines to patients - CNBC 

Tesla slips as Wells Fargo warns of waning effect of price cuts over demand - Reuters 

Petco CEO Ron Coughlin is out, former Best Buy exec to step in as interim chief executive - CNBC 

Google restricts election-related queries for its Gemini chatbot - CNBC 

Adidas posts first loss in 30 years and warns on US - Reuters 

Kevin Plank returns as Under Armour CEO, Mohamed El-Erian named board chair - CNBC 

Spotify to test full music videos in potential YouTube faceoff - Reuters 

Palantir CEO says short sellers bet against great companies 'so they can pay for their coke' - CNBC 

Waymo to start offering free driverless robotaxi services in Los Angeles - Reuters 

FEATURED INSIDER TRADE

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Senior VP and Treasurer at KRONOS WORLDWIDE INC ($KRO)

The Senior VP and Treasurer purchased 1,000 shares at $10.65/share ($10,652.30 total) which increased their vested holdings by 66.7%. The current price is $11.31 (+6.2%). Their median purchase size is $8,031.40 and this is their 2nd largest purchase out of 10 all time. (trade link)

Historic Returns
1m returns: 13% weighted | 9% median | 78% win rate (7/9)
3m returns: 19% weighted | 22% median | 100% win rate (9/9)
6m returns: 38% weighted | 19% median | 100% win rate (9/9)
1y returns: 90% weighted | 91% median | 78% win rate (7/9)

QUIZ

+3 POINTS - WEEKLY TOURNAMENT

This month’s quiz questions focus on the investing book, Irrational Exuberance by famed economist Robert Shiller, which examines economic bubbles in the 1990s and early 2000s and argues that the market is not efficient.

An in-depth guide/summary of this book is available on Shortform (a free trial and 20% off using my link!). Shortform has summaries/guides for 1000s of nonfiction books and even connects ideas between books. It’s one of my favorite tools for learning

In "Irrational Exuberance," how does Shiller suggest that speculative bubbles could be mitigated?

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Yesterday’s Question: How does Shiller in "Irrational Exuberance" argue that media coverage contributes to the growth of speculative bubbles?

Answer: Shiller argues that the media plays a crucial role in the growth of speculative bubbles by drawing attention to price changes in financial markets. This heightened focus on price movements can influence investor behavior, leading to further price changes. For instance, extensive media coverage of rising or falling stock prices can fuel investor enthusiasm or fear, respectively, exacerbating market volatility and reinforcing speculative bubbles.

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WEEKLY TOURNAMENT

Gain points and earn prizes every week just for voting on the quizzes/polls, replying to this email, and clicking on ads/sponsored links!

🏆 This Week’s Leaderboard

  1. jt33**** (102 points)

  2. makin*** (102 points)

  3. tmcca**** (102 points)

Scoring

  • +3 points for voting in each poll

  • +10 points for replying to this email

  • +15 points for clicking on an ad/sponsored link

  • +50 points for referring a friend

* Learn more about the Weekly Tournament here

MY OTHER FREE NEWSLETTERS

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THAT’S ALL FOLKS

+3 POINTS - WEEKLY TOURNAMENT

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