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Top stock pitches (Tue, Aug 20)

Top stock pitches (Tue, Aug 20)

Connor Van Ooyen
August 20, 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!

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:

Cronos Group Inc. (CRON)

Quest Resource Holding Corporation (QRHC)

Franklin Covey Co. (FC)

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

📢 IN CASE YOU MISSED IT 📢

New trades from professional hedge funds

13F filings were released last week which show the stocks that the biggest hedge funds bought/sold.

I collected 36 of the most interesting 13F filings and shared them in a thread on Twitter/X.

You can see which new stocks were bought/sold by investors like Warren Buffett, Michael Burry, David Einhorn, Bill Ackman, and more.

Just click the link below (and don’t forget to give it a like/repost).

13Fs were filed this week. Here are the portfolio updates for 36 of the top hedge funds:
Anything stand out?
— Yellowbrick Investing (@joinyellowbrick)
4:00 PM • Aug 17, 2024

STOCK PITCHES

Author Returns

The below stock pitch is from Raging Bull Investments.

We have 21 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 - Raging Bull Investments

Cronos Group Update: A multi-bagger in the making?

Cronos Group Inc. operates as a cannabinoid company that engages in the cultivation, production and marketing of cannabis products in Canada, Israel, and Germany. It offers dried flower, pre-rolls, oils, vaporizers, edibles, and cannabis tinctures.

Ticker: CRON | Price: $2.41 | Price Target: N/A
Market Cap: CAD 1.25B | Timeframe: N/A

🌳 Cannabis | 📈 Bullish Idea

Cronos Group Inc. (CRON) is a dominant Canadian cannabis LP showing strong performance with 46% YoY revenue growth and a 23% gross margin (+700bps). The company boasts $800M in cash and positive cash flow from operations. Its Spinach brand leads the market with a 16% share in edibles. CRON is well-positioned to benefit from industry consolidation and potential excise tax reform. International expansion presents significant growth opportunities. Trading at an EV less than 1x NTM sales, CRON offers multi-bagger potential through pricing upside, market growth, and margin expansion. The company's relationship with Altria provides a competitive advantage for U.S. market entry upon legalization. Despite current industry challenges, CRON's brand power, prudent investments, and efficiency gains are driving market share capture and cost reductions. The stock's long-term potential could see it reach a $20B+ market cap, with the possibility of becoming a global blue-chip cannabis player.

Read the full article here. Read time: 10 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/10985/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Lewistown Capital.

Their historic returns are:

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

BLOG POST - Lewistown Capital

Quest Resource Holding Corporation - $QRHC

Quest Resource Holding Corporation, together with its subsidiaries, provides solutions for the reuse, recycling, and disposal of various waste streams and recyclables in the United States.

Ticker: $QRHC | Price: $8.22 | Price Target: $22.71 (+176%)
Market Cap: $167M | Timeframe: 5 years

♻️ Waste/Recycling | 📈 Bullish Idea

Quest Resource Holding Corporation (QRHC), a waste broker with 90%+ recurring revenue and 100%+ net retention, trades at 10-11x run-rate EBITDA and offers 3x+ upside potential over 5 years. The company is poised for 15-20% EBITDA CAGR driven by strong organic growth momentum and improving margins through technology investments. Quest's platform approach allows management of over 100 waste streams, offering a one-stop solution for Fortune 1000 clients. Recent wins and a healthy pipeline suggest sustained growth, while technology enhancements promise increased operating leverage. Risks include customer concentration (29% from two clients), leverage (3.5x), and competition. The company's asset-light model, high recurring revenue, and strategic acquisitions have positioned it well in the market. Management, led by CEO Ray Hatch since 2016, has successfully transformed the business, diversified revenue streams, and made accretive acquisitions. With a total addressable market of $6-10bn and brokers only 20-50% penetrated, Quest has significant growth potential, including through M&A opportunities.

Read the full article here. Read time: 30 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/10874/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from The Lion's Roar.

Their historic returns are:

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

BLOG POST - The Lion's Roar

Franklin Covey Co. - $FC

Franklin Covey Co. provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide.

Ticker: FC | Price: $39.31 | Price Target: $57.61 (+47%)
Market Cap: $514M | Timeframe: N/A

🧠 Training Services | 📈 Bullish Idea

Franklin Covey (FC), is poised for growth driven by its All Access Pass (AAP) subscription model, which has increased gross margins by 1000bps since 2017. Q3 2024 showed revenue growth of 2.7% and deferred revenue up 8.7% YoY, signaling potential future growth. The company aims to expand from 265 to 400 client partners, enhancing sales capabilities. With $36M in net cash and aggressive buybacks, FC's capital-light model offers high incremental margins. The analyst estimates 2025 revenue growth of 12.8% and EBITDA of $72.4M, surpassing the $60M consensus. Catalysts include easy year-over-year comparisons, growing deferred revenue, and the release of Edition 5.0 of 'The 7 Habits' book. Risks involve sales inefficiencies, mixed program reviews, and potential complacency in leadership. The price target is set at $57.61.

Read the full article here. Read time: 7 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/10839/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Daqo New Energy Corp. (DQ) [56%]

🟨🟨⬜️⬜️⬜️ TeraWulf (WULF) - short [29%]

🟥⬜️⬜️⬜️⬜️ Gray Television, Inc. (GTN) [15%]

Your comments:

🪙 ddavi*** ($WULF - short): Held large amount, but cut back to conserve original investment plus profit.

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 58% bearish

Stock Market News

AMD to acquire server builder ZT Systems for $4.9 billion in cash and stock - Reuters

Estee Lauder's long-time CEO Fabrizio Freda to retire - Reuters

SEC charges Carl Icahn with hiding billions of dollars worth of stock pledges - CNBC

Goldman Sachs cuts odds of U.S. recession to 20% after retail and jobs data - CNBC

Fed survey shows lows in employment, worries about finding work and dissatisfaction with pay - CNBC

German defence stocks down after report of freeze on new Ukraine military aid - Reuters

GoPro to cut 15% of workforce in restructuring push - Reuters

Harley-Davidson slams brakes on ‘woke' policies after sparking biker and social-media outrage - New York Post

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 INTEST CORP ($INTT)

The Director purchased 10,900 shares at $6.80/share ($74,120.00 total) which increased their vested holdings by 11.6%. The current price is $7.29 (+7.2%). Their median purchase size is $62,717.70 and this is their 1st largest purchase out of 3 all time. link

LINKS YOU’LL LOVE

Lessons from Li Lu - the man Charlie Munger gave $88M to invest

The Art Of Investing w/ François Rochon

Going Out on Top: Walter & Edwin Schloss

How to survive a bear market

🎁 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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