Top stock pitches (Tue, Jul 9)

Connor Van Ooyen
July 09, 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:

Bezier Homes ($BZH)

Perion Network ($PERI)

Root, Inc. ($ROOT)

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.

New Trade Alert!

We just made a new investment in the YB Portfolio that should pretty quickly make us an easy $100+.

The new stock is…

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.

STOCK PITCHES

Author Returns

The below stock pitch is from Militia Capital.

Their historic returns are:

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

FUND LETTER - Militia Capital

Militia Capital New Portfolio Holding: Beazer Homes USA, Inc.

Beazer Homes USA, Inc. operates as a homebuilder in the United States. It designs, constructs, and sells single-family and multi-family homes under the Beazer Homes, Gatherings, and Choice Plans names.

Ticker: BZH | Price: $26.90 | Price Target: $82.44 (+206%)
Market Cap: $848M | Timeframe: 5 years

🏠 Homebuilder | 📈 Bullish Idea

I recently decided to take a position with a 5% investment in Bezier Homes (BZH), which is a bit of a riskier play. Although the company isn't managed as proficiently as M/I Homes (MHO) and carries a slightly higher debt load while operating in somewhat less favorable markets, I find the valuation quite compelling. Beazer Homes is currently trading at only 70% of its hard asset value and at a multiple of four times its peak yearly earnings. This strategic move serves as a counterbalance to my shorts, in the event that interest rates fall. If that scenario plays out, it's conceivable that Beazer Homes could see an impressive 200% upside within the next five years.

Read the full article here. Read time: 1 min

Author Returns

The below stock pitch is from The Fond Investor.

Their historic returns are:

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

BLOG POST - The Fond Investor

Perion Network Ltd. - $PERI

Perion Network Ltd. provides digital advertising solutions to brands, agencies, and publishers in North America, Europe, and internationally.

Ticker: PERI | Price: $8.54 | Price Target: $14 (+64%)
Market Cap: $404M | Timeframe: N/A

📢 Digital Advertising | 📈 Bullish Idea

Perion Network (PERI), an Israeli ad-tech company, has seen its stock plummet 70% YTD after losing significant revenue from Microsoft Bing. Despite this setback, Perion remains profitable, with its higher-quality advertising segment intact. The company is now trading as a net-net with 115% of its market cap in cash and at 0.8x 2025 sales. Management forecasts $490M-$510M in revenue and $48M-$52M in EBITDA for FY24. With an estimated $40M EBITDA and $0.30 EPS for 2024, Perion presents a compelling value proposition at current prices. The $14 price target suggests a 65% upside. Potential catalysts include share buybacks, accretive M&A, a narrative shift, and possible activist involvement. Risks include poor management communication and a retail-driven shareholder base. The company's transition from its low-quality search business to higher-quality, AI-driven advertising solutions positions it for long-term growth in the dynamic ad-tech industry.

Read the full article here. Read time: 7 min

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Author Returns

The below stock pitch is from Rogue Funds.

We have 9 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 - Rogue Funds

ROOT is Rapidly Changing the Auto Insurance Landscape

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products.

Ticker: ROOT | Price: $60.12 | Price Target: $100 (+66%)
Market Cap: $895M | Timeframe: N/A

💸 Insurance Tech | 📈 Bullish Idea

Root, Inc. (ROOT) is an InsurTech company trading at $50 with a $100 price target, representing a potential 100% upside. The company boasts an industry-leading loss ratio of 61.2%, $64M in TTM free cash flow, and has reached breakeven profitability. Root's competitive advantage lies in its data-driven approach, with over 25 billion miles of driving data collected across 34 states. The company is experiencing rapid growth, with 100%+ year-over-year premium growth. Valuation metrics include 13x normalized FCF and 1x sales, which are considered low given the company's growth trajectory. Key catalysts include a low float (64%), 17% short interest, and recent inclusion in the Russell 2000 index. Risks involve high marketing costs and customer retention challenges. Root's unique selling proposition is its app-based tracking of driving behavior to offer personalized insurance rates, which larger competitors have struggled to replicate efficiently. The company aims to expand its product offerings to include renters and homeowners insurance to improve customer retention and lifetime value.

Read the full article here. Read time: 8 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ BlueLinx Holdings ($BXC) [41%]

🟨🟨⬜️⬜️⬜️ Roivant Sciences ($ROIV) [38%]

🟥⬜️⬜️⬜️⬜️ FIGS, Inc ($FIGS) [21%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 70% bullish

One of the top gainers is a Yellowbrick Premium Portfolio holding which is always nice to see! The market continues to truck along and Yellowbrick Road readers are as bullish as ever. As reader chuckt**** commented: “Big Mo (momentum) is on the bull’s side”.

Stock Market News

Corning raises second-quarter core sales forecast driven by AI boom - Reuters

EV maker Lucid beats quarterly deliveries estimates helped by price cuts - Reuters

Grifols family, Brookfield eye $6 bln takeover bid for Grifols, report says - Reuters

Paramount, Skydance merger deal ends Redstone era - New York Post

Exxon Mobil expects oil prices to boost second-quarter earnings - Reuters

Amazon announces new $79 Echo Spot alarm clock - CNBC

LINKS YOU’LL LOVE

Exploring the mousetrap, timing, and homework

Notes from Buffett: The Making of an American Capitalist

Interview with Francois Rochon (returned 15.7% annually since 1993)

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.

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Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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