Top stock pitches (Thu, May 9)

Connor Van Ooyen
May 09, 2024

Author Returns

The below stock pitch is from Choice Equities Capital.

We have 34 stocks for 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

Choice Equities Capital Portfolio Holding: H&E Equipment Services, Inc.

H&E Equipment Services, Inc. operates as an integrated equipment services company in the United States. The company operates in five segments: Equipment Rentals, Sales of Rental Equipment, Sales of New Equipment, Parts Sales, and Repair and Maintenance Services.

Ticker: HEES | Price: $48.18 | Price Target: $140 (+191%)
Market Cap: $1.72B | Timeframe: 3 years

🏗️ Equipment Rental | 💰 2.3% Dividend | 📈 Bullish Idea

H&E Equipment Services (HEES), the #4 equipment rental company in the U.S., is well-positioned for growth with a focus on the Sun Belt region and a proven M&A track record, achieving a 10% branch CAGR post-pandemic. The industry is consolidating, with the top four players approaching 40% market share, and the company is set to benefit from secular growth tailwinds driven by the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) spending. Despite a more attractive growth outlook and margin expansion opportunity compared to larger peers, HEES trades at a substantial discount of 5x EBITDA, a three-turn discount to its peers. With continued execution on its organic and acquisition strategy and potential multiple expansion, the stock could reach $115-$140 within three years.

Read the full article here. Read time: 2 min

Author Returns

The below stock pitch is from Greenhaven Road Capital.

We have 35 stocks for 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

Greenhaven Road Capital New 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: $11.59 | Price Target: N/A
Market Cap: $387M | Timeframe: N/A

🏗️ Equipment Dealership | 💰 2% Dividend | 📈 Bullish Idea

Alta Equipment Group (ALTG) is an attractive investment opportunity due to its less cyclical business model, strong cash generation, and lower debt than it appears. The company benefits from a growing annuity-like asset in its parts and services segment, which provides a steady stream of revenue and profits. ALTG is run by owner-operator Ryan Greenawalt, who has a long runway for growth through organic expansion and acquisitions. The company's valuation is compelling, trading at approximately 3x EBITDA (excluding floor plan debt), with a free cash flow to equity of $2.84 per share in 2023, up from $0.74 four years ago, despite the stock price remaining flat. If the price stays low, buybacks are likely, as the CEO owns 18% of the shares outstanding.

Read the full article here. Read time: 4 min

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Author Returns

The below stock pitch is from chocolatechip 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

Enerpac Tool Group Corp. - $EPAC

Enerpac Tool Group Corp. manufactures and sells a range of industrial products and solutions in the United States, the United Kingdom, Germany, Australia, Canada, China, Saudi Arabia, Brazil, France, and internationally. It operates through Industrial Tools & Services and Other segments.

Ticker: EPAC | Price: $37.37 | Price Target: $90 (+140%)
Market Cap: $2B | Timeframe: 4-5 years

🏭 Industrial Product Manufacturing | 📈 Bullish Idea

Enerpac Tool Group (EPAC), a premier hydraulic tool maker with a 65-year track record, is significantly undervalued despite its strong competitive position, 25%+ ROIC, and recent margin expansion from 14% to 25% EBITDA margins through an 80/20 business improvement program led by a proven CEO from Danaher and ITW. The company is well-positioned for growth with a 7% organic growth outlook driven by infrastructure spending, geographic expansion, and new product introductions. With a combination of organic growth, margin expansion, and disciplined M&A, Enerpac could compound value at a mid-to-high 20s% IRR, reaching an $80-90 price target in 4-5 years for a ~2.4x MOIC, justified by its attractive ROIC, cash flow growth, and comparable transactions.

Read the full article here. Read time: 10 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ ADTRAN Holdings ($ADTN) [47%]

🟨🟨⬜️⬜️⬜️ Wrap Technologies ($WRAP) [31%]

🟥⬜️⬜️⬜️⬜️ Burford Capital Limited ($BUR) [22%]

Your comments:

💼 dansto*** ($BUR): I am a penny trader at heart but love good long swings that I set and forget, BUR looks like it may be one.

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 83% bullish

A bit of a dip in sentiment as we hit a little rough patch in earnings. Investor favorites $SHOP, $CPNG, and $AFRM are all in the biggest losers list and 3 of the 4 indexes were red after a streak of big, green days. The news sentiment also dipped a little bit and is now below the 7-day average (though still slightly bullish). Yellowbrick Road readers remain very bullish while the Fear v Greed index remains fearful.

Stock Market News

Shopify shares plunge 18% on weak guidance - CNBC

Uber forecasts gross bookings for second quarter below expectations - Reuters

Beer giant AB InBev beats profit estimates, with Bud Light boycott set to ease one year on - CNBC

U.S. revokes some export licenses to sell chips to Huawei in a bid to curb China's tech power - CNBC

Affirm Earnings Top Views With Guidance Above Expectations. AFRM Stock Climbs. - Investors Business Daily

Arm's quarterly revenue forecast beats Street; annual rev guidance misses - Reuters

Airbnb beats earnings expectations for first quarter but offers weaker-than-expected guidance - CNBC

US Tesla Autopilot probe focusing on securities, wire fraud after Elon Musk hyped self-driving tech - New York Post

Google DeepMind unveils next generation of drug discovery AI model - Reuters

Disney, Warner Bros. Discovery to bundle streaming services - CNBC

Robinhood climbs after reporting record earnings for first quarter - CNBC

Reddit shares jump 14% after revenue pops in first-ever earnings report - New York Post

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SVP of Pharmaceutical Development at Corvus Pharmaceuticals, Inc. ($CRVS)

The See Remarks purchased 20,000 shares at $1.73/share ($34,624.00 total) which increased their vested holdings by 13.1%. The current price is $1.68 (-3.0%). Their median purchase size is $25,212.00 and this is their 1st largest purchase out of 2 all time. (trade link)