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Top stock pitches (Thu, Sep 12)

Top stock pitches (Thu, Sep 12)

Connor Van Ooyen
September 12, 2024

About // Sponsor YBR // Yellowbrick Website // Twitter

*This newsletter is for entertainment purposes only. Nothing in this newsletter is financial advice or recommendations.

👋 Good Morning!

Note: There will not be an email tomorrow and next week will feature shortened emails while I am out of the country.

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

The three stock pitches you’ll read about in today’s email are:

Grocery Outlet (GO)

Trupanion (TRUP)

High Tide Inc. (HITI)

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

YBR PORTFOLIO

The YBR Portfolio copies the trades of the top 10 investors (based on the average returns of their previous stock pitches) in our database of 1,000+ investors. If you want to be alerted when the best investors buy/sell a stock, then this section is for you.

*All investments in the YBR Portfolio will be for ~3% of the portfolio value (which allows us to hold a maximum of 33 stocks at a time).

**I use Interactive Brokers (link) for the portfolio because it makes it easy to trade international and OTC stocks. If you decide to open an account with them, use this link so they know I sent you.

The YBR Portfolio is only available to Premium Subscribers. If you want to know which stocks the top investors are investing in, upgrade to Yellowbrick Premium.

YB Premium Portfolio returns - started mid-May

WINNING PITCH

94% Returns in 6 Months

$ABCP was added to the website in mid-March and is already up almost 100% in just 6 months!

It was also included in the Elite Investor Feed (link), which includes stock pitches from only the best investors in our database.

STOCK PITCHES

Author Returns

The below stock pitch is from Directionally Correct Research.

We have 5 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.

BLOG POST - Directionally Correct Research

Grocery Outlet Holding Corp. - $GO

Grocery Outlet Holding Corp. operates as a retailer of consumables and fresh products sold through independently operated stores in the United States.

Ticker: GO | Price: $16.50 | Price Target: $29.50 (+79%)
Market Cap: $1.62B | Timeframe: 3 years

🛒 Discount Grocer | 📈 Bullish Idea

Grocery Outlet (GO), a discount grocer trading at 9x 2024 EBITDA, faces temporary headwinds from ERP implementation issues and slow unit growth. The bull case targets 10% topline growth and a 20%+ 3-year IRR, with a price target of $29.50 based on 10x 2026 EBITDA. The company benefits from inflation driving discount shopping and its differentiated 'treasure hunt' offering. GO aims to expand from 520 stores to 4,800 ultimately, targeting 10% annual unit growth. Risks include exposure to low-income consumers, challenges in hiring Independent Operators (IOs), and potential limitations in product sourcing. Recent concerns about weak performance in newer units and growing financial assistance (TCAP) for IOs have been overstated, with trends showing improvement. GO's unique business model, including a 50-50 gross profit split with IOs and opportunistic sourcing of name-brand products, positions it well in the competitive discount grocer space. The company is also expanding geographically through the acquisition of United Grocery Outlet and launching its own private label offerings.

Read the full article here. Read time: 6 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11649/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Saga Partners.

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.

FUND LETTER - Saga Partners

Saga Partners Portfolio Holding: Trupanion, Inc.

Trupanion, Inc., together with its subsidiaries, provides medical insurance for cats and dogs on a monthly subscription basis in the United States, Canada, Continental Europe, and Australia.

Ticker: TRUP | Price: $42.89 | Price Target: N/A
Market Cap: $1.81B | Timeframe: N/A

🐶 Pet Insurance | 📈 Bullish Idea

Trupanion (TRUP) is a best-in-class pet insurer with a 71% payout ratio compared to the industry average of 50-60%. The company differentiates itself through a comprehensive coverage model, seamless claims processing, and a focus on providing the best value to customers. Trupanion's low-cost provider status is achieved through frugality, vertical integration, and a unique distribution model utilizing Territory Partners. The company's automated claims processing software strengthens relationships with veterinary hospitals and improves customer retention. With only 3% market penetration in the U.S. and Canada, Trupanion has a long runway for growth. The company's approach, developed through years of trial and error, has created a virtuous cycle that is difficult for competitors to replicate. While short-term share price volatility is expected, the long-term outlook for Trupanion's earning power and share price is positive.

Read the full article here. Read time: 3 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11837/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from @mvcinvesting.

Their historic returns are:

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

TWITTER - @mvcinvesting

High Tide Inc. - $HITI

High Tide Inc. engages in the cannabis retail business in Canada, the United States, and internationally. The company operates through Retail and Wholesale segments.

Ticker: HITI | Price: $2.21 | Price Target: N/A
Market Cap: 241M | Timeframe: N/A

🌳 Cannabis Retailer | 📈 Bullish Idea

High Tide Inc. (HITI) is the leading Canadian cannabis retailer with a 10.9% market share and over 1.5 million discount club members. The company has become FCF and net income positive, with plans to expand in Canada (targeting 150 stores) and potentially enter Germany and the US markets. HITI's new paid membership program is growing rapidly, and the company has secured non-dilutive financing. Trading at 5x NTM Adj. EBITDA compared to peers at 7-8x, HITI is undervalued despite its superior performance. The company's growth strategy includes market consolidation, white label products, and improving margins. Risks include potential delays in German expansion due to elections and US cannabis rescheduling. With less than 10% institutional ownership, HITI presents a potential multibagger opportunity as it aims to become a billion-dollar business.

Read the full article here. Read time: 11 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11686/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ AppLovin Corporation (APP) [45%]

🟨🟨⬜️⬜️⬜️ Axcelis Technologies (ACLS) [45%]

🟥⬜️⬜️⬜️⬜️ Customers Bancorp (CUBI) - short [10%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 58% bullish 📈

Stock Market News

Consumer prices rose 0.2% in August with core inflation higher than expected - CNBC

Meme stock GameStop slumps as revenue drop fans turnaround doubts - Reuters

OpenAI in talks to raise funds at $150 bln valuation, Bloomberg News reports - Reuters

Health Rounds: Once-weekly insulin from Eli Lilly appears effective as daily injections - Reuters

Amazon is opening Fresh supermarkets after yearlong stall — but many locations remain vacant - CNBC

US closer to green lighting Nvidia chips for Saudi Arabia, Semafor reports - Reuters

Adobe to launch generative AI video creation tool later this year - Reuters

FEATURED INSIDER TRADE

The insider trade is 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

Director at V2X, Inc. ($VVX)

The Director purchased 3,125 shares at $48.00/share ($150K total) which increased their vested holdings by 8.1%. The current price is $48.57 (+1.2%). Their median purchase size is $23,272.00 and this is their 1st largest purchase out of 10 all time. link

4 other insiders also purchased the stock

LINKS YOU’LL LOVE

Warren Buffett’s testimony regarding the Salomon Brothers scandal

31 Years of Stock Market Returns

Summarizing Charlie Munger’s framework

🎁 REFERRAL PROGRAM 🎁

Use your unique URL below or the share URL for any of the stock pitches to unlock insanely valuable awards.

Premium members have access to these awards here.

THAT’S ALL FOLKS

Thank you so much for reading today’s email! Your support is the only way I can write this email for free every day.

Give me feedback in the poll below and share the newsletter with other investors if you find it useful!

Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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