Top stock pitches (Tue, Aug 6)

Connor Van Ooyen
August 06, 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:

Webster Financial Corporation (WBS)

Xponential Fitness (XPOF)

CNH Industrial N.V. (CNH)

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).

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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

+58% Returns in 2 Weeks by Shorting $NNE

A killer short trade by Hunterbrook Media that was added to the website and shared in the Premium email on July 19th.

Read the stock pitch here.

STOCK PITCHES

Author Returns

The below stock pitch is from Rewey Asset Management.

We have 7 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 - Rewey Asset Management

Rewey Asset Management Portfolio Holding: Webster Financial Corporation

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of financial products and services to individuals, families, and businesses in the United States.

Ticker: WBS | Price: $42.49 | Price Target: $60 (+41%)
Market Cap: $7.63B | Timeframe: N/A

🏦 Bank | 📈 Bullish Idea

Webster Financial Corporation (WBS) is trading at 0.87x P/B and 7.75x 2024 P/E, presenting a compelling valuation opportunity. The bank boasts strong financials with a 10.5% CET1 ratio and an 84.1% loan-to-deposit ratio. Its diverse deposit base includes 15% from HSA Bank with a low 15bps cost. WBS forecasts 5% loan growth and 5-7% deposit growth for 2024. The bank's $20B CRE portfolio includes only $1B in office exposure, mitigating concerns about commercial real estate risks. With a $60 price target representing 38% upside and a 3.69% dividend yield, WBS offers attractive potential returns. A possible HSA Bank IPO could serve as a catalyst for unlocking value. The bank's strong position along the I-95 corridor provides room for growth, while its Healthcare Financial Services unit continues to show robust performance with 19.2% pre-tax net revenue growth in Q1 2024. Key risks include persistent CRE fears and delayed interest rate cuts.

Read the full article here. Read time: 4 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7334/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Laughing Water Capital.

We have 20 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 - Laughing Water Capital

Laughing Water Capital New Position: Xponential Fitness, Inc.

Xponential Fitness, Inc., through its subsidiaries, operates as a boutique fitness franchisor in North America.

Ticker: XPOF | Price: $13.71 | Price Target: $49 (+257%)
Market Cap: $8.54B | Timeframe: N/A

🏋️ Fitness Franchiser | 📈 Bullish Idea

Xponential Fitness (XPOF), a franchisor of boutique fitness concepts, presents a compelling investment opportunity with potential 200%+ upside. Despite a short-seller report and CEO removal causing a stock plummet, the company's fundamentals remain strong. XPOF's new CEO is open to divesting underperforming concepts and likely share repurchases. Future growth is nearly guaranteed, with sold licenses exceeding open studios. The company demonstrated resilience by growing during COVID-19. An ongoing SEC investigation is causing uncertainty, but its resolution is expected to lead to a stock re-rating. Trading at a discount to peers, XPOF could see significant upside if it achieves peer multiples. The company's crown jewel, Club Pilates, could potentially be worth more in a private sale than the entire portfolio's current market valuation. With a low litigation rate of less than 2 conflicts per 1,000 units and zero lawsuits for Club Pilates, the franchisee satisfaction appears high. The franchisor business model typically commands high multiples, often trading at 20x EBITDA or more, suggesting further upside potential for XPOF as it continues to execute its growth strategy.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7314/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from @ArmsGarrett.

We have 6 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.

TWITTER - @ArmsGarrett

CNH Industrial N.V. - $CNH

CNH Industrial N.V., an equipment and services company, engages in the design, production, marketing, sale, and financing of agricultural and construction equipment in North America, Europe, the Middle East, Africa, South America, and the Asia Pacific.

Ticker: $CNH | Price: $9.75 | Price Target: $24 (+146%)
Market Cap: $12.48B | Timeframe: N/A

🚜 Agricultural Equipment | 📈 Bullish Idea

CNH Industrial N.V. (CNH) is trading at $10 with a $12.5B market cap, representing a 6.5x P/E on below mid-cycle earnings and a 14x PE discount to the S&P 500. The company achieved a 30% ROE in 2022 and expects 2024 operating margins of 14% despite a 13% revenue drop. CNH anticipates $310-365M in COGS savings and $140-180M in SG&A cuts. The stock is down 37% over the past year due to concerns about an agricultural downturn, but improved operational efficiency and a strong balance sheet position the company well. CNH expects 2026 EPS to exceed $2, with a 10-12x P/E target suggesting 100-140% upside potential in less than two years. The company has implemented a $1B buyback program and a $600M dividend. With an underlevered balance sheet, growing precision agriculture products, and organizational restructuring, CNH presents a compelling investment opportunity despite near-term cyclical headwinds in the agricultural equipment market.

Read the full article here. Read time: 3 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7372/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Kosmos Energy (KOS) [36%]

🟨🟨⬜️⬜️⬜️ Vistry Group PLC (VTY.L) [32%]

🟥⬜️⬜️⬜️⬜️ Fathom Holdings Inc. (FTHM) 329%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 40% bullish

Stock Market News

Here are all the reasons why Monday's major market wreck is happening - CNBC

Palantir raises annual revenue forecast on AI strength - Reuters

Lucid gets $1.5 billion cash infusion from Saudi shareholder, quarterly revenue beats estimates - Reuters

CrowdStrike says it isn't to blame for Delta's flight cancellations after July outage - CNBC

Oil prices rise over $1 on mounting concerns over Middle East supply - Reuters

LINKS YOU’LL LOVE

The Porsche Family’s Race to the Top

The Optimist - a profile on Bill Ackman

Exploring the bookshelf, fresh eyes, and treadmills

by @QCompounding on X

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THAT’S ALL FOLKS

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Connor

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