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Top stock pitches (Thu, Mar 28)
Connor Van Ooyen
March 28, 2024
About // Sponsor YBR // Yellowbrick Website // Twitter
👋 Good Morning!
This is the Yellowbrick Road where I share the best stock pitches from billion-dollar hedge funds, professional analysts, millionaire investors, and more!
Our AI read and summarized 132 stock pitches, 1188 news articles, and 170 insider trades and found:
A potential new Google ad unit in Pinterest (stock pitch)
Robinhood unveils new 3% unlimited cash back credit card (news)
3 biggest insider sells (insider trade)
and more…
Thanks for reading! 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
“He who turns over the most rocks wins”
This quote by investing legend Peter Lynch exemplifies what Yellowbrick is all about.
If you want to make better investments, you need to sift through more quality investment ideas (i.e. turn over more rocks).
This free, daily newsletter is a start. But if you really want to “turn over more rocks”, you need to visit the Yellowbrick website and upgrade to premium.
The website contains over 2,000 stock pitches with 25+ new ones added each day. It’s totally free to use with a 30-day delay.
But if you upgrade to premium, you will get the new stock pitches as soon as they are added plus a daily email with a quick rundown of the new stock pitches that were added to the site.
It’s the fastest way to turn over more rocks and find better investment ideas.
*The button below will also give you 20% off
STOCK PITCHES
ANALYST REPORT
Piper Sandler discovers potential new Google ad unit in Pinterest
Pinterest, Inc. operates as a visual search and discovery platform in the United States and internationally. Its platform allows people to find ideas, such as recipes, home and style inspiration, and others; and to search, save, and shop the ideas. The company was formerly known as Cold Brew Labs Inc
Ticker: PINS | Price: $34.78 | Price Target: $48 (+38%)
Market Cap: $24B | Timeframe: 2024
📱 Social Media | 📢 Ads | 📈 Bullish Idea
Piper Sandler spots new Google ads in the Pinterest app, signaling a potential US partnership test. The code suggests the ad units could be search-related or use audience data to retarget users on Pinterest. Prior to this week, the last time Google ads were seen on Pinterest was in February 2023. Pinterest remains Piper Sandler's top Mid-Cap pick with a price target of $48. They reiterate their Overweight rating.
Read the full article here. Read time: 1 min
BLOG POST
Savant Investors' Idea Spotlight: Sweetgreen (short)
Sweetgreen, Inc., together with its subsidiaries, operates fast food restaurants serving healthy foods at scale in the United States. The company also accepts orders through its online and mobile ordering platforms, as well as sells gift cards that do not have an expiration date and can be redeemed
Ticker: SG | Price: $25.48 | Price Target: 11.78 (-54%)
Market Cap: $2.76B | Timeframe: 2025
🥗 Fast Casual Dining | 📉 Bearish Idea
Sweetgreen, Inc. (SG) is poised to experience a substantial 54% downside by 2025, primarily due to three key factors. Firstly, the company's expansion into suburban areas coupled with high restaurant operating costs is anticipated to constrain margin expansion. As Sweetgreen extends its reach beyond New York City, where restaurants yield more than double the revenue compared to other locations, the anticipated growth in average unit volume (AUV) is expected to plateau. Labor and real estate expenses remain elevated compared to competitors, thereby limiting the company's ability to significantly reduce unit costs in the foreseeable future. Secondly, the introduction of the Infinite Kitchen, an automated restaurant capable of serving up to 500 salads per hour, addresses a non-existent problem within the current Sweetgreen network. The anticipated cost savings over a restaurant's lifespan fail to justify the expenses associated with this concept, potentially leading to diminished unit economics and return on invested capital (ROIC). Lastly, Sweetgreen grapples with a bloated selling, general, and administrative (SG&A) structure, surpassing that of any other fast casual restaurant chain, despite its slower growth compared to its closest competitor, CAVA. The combination of restrained AUV growth, stagnant restaurant-level profit margins capped at 18%, and an elevated SG&A burden is expected to compel Sweetgreen to explore financing options in 2025. Even in a base-case scenario where the company successfully boosts restaurant margins to 20% while aligning SG&A with industry norms, a significant 54% downside risk to SG's stock remains. Potential risks to this assessment include an acceleration in unit growth, stable or growing AUV amid Sweetgreen's expansion, the prospect of a buyout or activist intervention, aggressive SG&A reductions by management, and the current 15% short interest relative to the float.
Read the full article here. Read time: 6 min
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FUND LETTER
TimesSquare U.S. Small Cap Growth Strategy New Portfolio Holding: FormFactor, Inc.
FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions in the United States, Taiwan, South Korea, China, Europe, Japan, Malaysia, Singapore, and internationally.
Ticker: FORM | Price: $44.85 | Price Target: N/A
Market Cap: $3.38B | Timeframe: N/A
⚡️ Semiconductor | 📈 Bullish Idea
FormFactor, Inc., known by its ticker FORM, has recently been included in our portfolio holdings. This company specializes in the manufacturing of consumable interfaces that play a critical role in connecting semiconductors with testing equipment. With products like probe cards and probe stations, FormFactor enables highly specialized testing equipment to interface with semiconductor wafers. These cards are designed to be disposed of after use. FormFactor operates within a market niche that has limited competition, which positions the company to potentially benefit from the expected increase in chip volumes and the escalating complexity within the semiconductor industry.
Read the full article here. Read time: 1 min
Which stock idea was the most compelling to you? |
Yesterday’s Poll Results:
🟩🟩🟩⬜️⬜️ PAR Technology ($PAR) [47%]
🟨🟨⬜️⬜️⬜️ Chipotle Mexican Grill ($CMG) [28%]
🟥⬜️⬜️⬜️⬜️ MPH Health Care AG ($93M1.F) [25%]
Your comments:
🌯 burkh*** ($CMG): 7000 new locations? I like aggressive companies. CMG has some financial weak spots, but every other aspect looks strong. They also look like a good candidate for a stock split. I'm in.
🧑🍳 nick*** ($PAR): Restaurants are always looking for ways to streamline efficiencies and eliminate overhead. It’s already an industry with slim profit margins so any tech that can improve that should be successful.
MARKET OVERVIEW / NEWS
Market Overview
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 62% bullish
A mixed day for social media sites as Trump’s stock popped after the media company merged with Truth Social stock $DWAC to now trade under the ticker $DJT but Reddit was the biggest loser of the day after a very successful first few days after the IPO.
All of the indexes ended the day quite green, the Fear v Greed index jumped a couple of points to 70, YBR readers are 62% bullish again (for the 3rd day in a row), and the stock market news index jumped a bit and is above the 7-day average.
Stock Market News
Robinhood ventures further beyond trading with new credit card - Reuters
Carnival says Baltimore bridge collapse could bring up to $10M earnings impact in 2024 - Fox Business
Amazon spends $2.75 billion on AI startup Anthropic in its largest venture investment yet - CNBC
US FDA approves Merck's blood pressure therapy - Reuters
Chinese EV maker Nio cuts Q1 deliveries forecast - Reuters
H&M shares jump 14% as profit smashes expectations - CNBC
Video game retailer GameStop slumps after sharp decline in quarterly sales - Reuters
Hulu launches on Disney+ in bid to boost streaming use - Reuters
Short sellers target Reddit shares as stock slips - Reuters
BIGGEST INSIDER SALES
The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
10% Owner at T-Mobile US, Inc. ($TMUS) sold 566,044 shares at $160.88/share ($91.06M total) which decreased their vested holdings by 0.1%. Their median sale size is $91.85M and this is their 13th largest sale out of 23 all time (link). Is part of 10b5-1 plan
Chairman and CEO at CONOCOPHILLIPS ($COP) sold 607,000 shares at $125.91/share ($76.43M total) which decreased their vested holdings by 85.6%. Their median sale size is $69.55M and this is their 1st largest sale out of 5 all time (link). 1 other insiders also sold the stock
Executive Chairman at AUTOZONE INC ($AZO) sold 6,700 shares at $3190.22/share ($21.37M total) which decreased their vested holdings by 27.4%. Their median sale size is $19.99M and this is their 11th largest sale out of 22 all time (link)
SECRET QUESTION
(Or if you’d rather not answer, you can just reply and say hi!)
Secret Question: What’s an investing product/newsletter/website that you use every day (not including Yellowbrick Road)? Not directly related to investing, but I read the Stratechery newsletter every morning (and have been a paying subscriber for like 8 years).
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THAT’S ALL FOLKS
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Connor
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