🟨 The Yellowbrick Road
Posts
Top stock pitches (Tue, Jun 18)

Top stock pitches (Tue, Jun 18)

Connor Van Ooyen
June 18, 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:

Ulta Beauty ($ULTA)

Interactive Brokers ($IBKR)

Imperial Petroleum Inc. ($IMPP)

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 (you get a 20% discount using that link or the button below).

STOCK PITCHES

Author Returns

The below stock pitch is from @thexcapitalist.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

TWITTER - @thexcapitalist

ULTA Beauty: Double in 5 Years?

Ulta Beauty, Inc. operates as a specialty beauty retailer in the United States. The company offers branded and private label beauty products, including cosmetics, fragrance, haircare, skincare, bath and body products, professional hair products, and salon styling tools through its Ulta Beauty stores, shop-in-shops, Ulta.com website, and its mobile applications.

Ticker: ULTA | Price: $389.15 | Price Target: $645 (+66%)
Market Cap: $18.25B | Timeframe: 5 years

💄 Beauty Retailer | 📈 Bullish Idea

Ulta Beauty, the leading US beauty retailer with over 1,850 locations, boasts a wide moat through economies of scale, network effects, and a passionate community, making it resilient to economic downturns as beauty demand remains relatively stable. The company has consistently grown its revenue at an 8.6% CAGR and EPS at a 16.4% CAGR over the last five years, with a rock-solid financial position generating $1.6 billion in EBIT against $1.9 billion in debt. Ulta's operational efficiency is impressive, with a 58% ROE, steady 35%+ gross margins, and an 11% net margin. The company's heavy buyback program signals management's confidence. Given a conservative assumption of 7% annual revenue growth and an 11% net margin, Ulta's stock has a price target of $645, offering an attractive 18% CAGR upside potential over the next five years. Accounting for potential buyback-driven multiple expansion, the price target could reach $860, making Ulta an attractive core holding for investors.

Read the full article here. Read time: 10 min

Author Returns

The below stock pitch is from Mindful Compounding.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

BLOG - Mindful Compounding

A Deep Dive into Interactive Brokers - $IBKR

Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company engages in the execution, clearance, and settlement of trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), precious metals, and cryptocurrencies.

Ticker: IBKR | Price: $121.06 | Price Target: N/A
Market Cap: $50.59B | Timeframe: N/A

💸 Electronic Stock Broker | 📈 Bullish Idea

Interactive Brokers (IBKR), a premier global broker with 2.8 million accounts and 50% recurring revenue, possesses significant competitive advantages, including the lowest costs and rates in the industry, superior tools, a focus on high-value clients such as hedge funds, and a profitable platform. The company expects 20-25% annual account growth, driven by industry growth, market share gains, introducing broker expansion, international markets, and potential acquisitions. Founded and majority-owned by Thomas Peterffy, IBKR boasts a highly experienced management team. Despite risks such as low market volatility, key man risk, interest rate fluctuations, and exposure to financial crises, the company's current valuation of ~20 P/E offers an estimated 8-10% CAGR based on conservative estimates, making it an attractive investment opportunity for those seeking a high-quality, growing business in the brokerage industry.

Read the full article here. Read time: 20 min

YELLOWBRICK PREMIUM

5 days left…

to upgrade to Yellowbrick Premium - the most valuable investing service on the internet - before the price increases.

One of the perks is the Top Investor Leaderboard - a leaderboard of the most profitable investors in our database of over 1000 investors (based on the returns of their previous stock pitches).

You can visit their profile to see all of the stock pitches they have made and find your next profitable investment idea.

Screenshot of the Top Investor Leaderboard

Click the button below to see all of the Yellowbrick Premium perks and to upgrade before the price increases next week!

Author Returns

The below stock pitch is from zach721.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

VALUE INVESTORS CLUB - zach721

Imperial Petroleum Inc. - $IMPP

MaxCyte is a biotechnology company that specializes in cell engineering technologies used in the development of gene therapies, drug discovery, and cell-based research. They provide products and services for cell modification to biopharmaceutical companies. MXCT supports advancements in gene editing, immune-oncology, and other growing scientific fields.

Ticker: IMPP | Price: $3.49 | Price Target: $8.0 (+129%)
Market Cap: $108M | Timeframe: N/A

🛢️ Oil/Gas | 📈 Bullish Idea

Imperial Petroleum Inc. (IMPP), a Greek shipping company that spun off from GASS, presents a compelling investment opportunity with a current valuation of $120 million despite having $360 million in net tangible equity, an expected $140+ million in net cash, and $40-50 million in earnings power by the end of the year. The stock is heavily shorted at 3.8 million shares with a -45% borrow cost, and the company's cash balance is expected to exceed its market cap. CEO Harry Vafias, who owns 39% of the equity, is aligned with shareholders after past dilution and is focused on driving shareholder value through buybacks and strong results. The market implies a 75% chance of further dilution, but the odds are more likely around 25%. With a current price of $3.30, IMPP has $4.50+/share in expected cash, $12+ in tangible book value, and an estimated $1+ EPS in 2024. The stock has a price target of $7-8 if no further offerings occur and buybacks continue, with potential upside catalysts including cash build-up, strong results, and buybacks. The main risk is the possibility of more dilution.

Read the full article here. Read time: 5 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ ASML Holding N.V. ($ASML) [39%]

🟨🟨⬜️⬜️⬜️ P10, Inc ($PX) [35%]

🟥⬜️⬜️⬜️⬜️ Rithm Capital ($RITM) [26%]

MARKET OVERVIEW / NEWS

Market Overview

Which stock idea was the most compelling to you?

Yesterday’s Poll Results: 55% bullish

The market continues to just work its way up, mostly driven by the large tech companies that continue to outperform the market. All of the sentiment checks rose a little bit, but we just continue to fluctuate between slightly bearish and slightly bullish.

Stock Market News

Activist Starboard Value takes about $500 mln stake in Autodesk, WSJ reports - Reuters

Goldman Sachs raises S&P 500 year-end target to 5,600 - Reuters

Broadcom Hits Fresh Record High After Stock Split Announcement - Investopedia

Berkshire Hathaway sells $39.8 mln of shares in China's BYD - Reuters

US sues Adobe over subscription plan disclosures - Reuters

Micron Technology's AI Reach Leads To a BofA Price Target Increase - Investopedia

Apple stops offering buy now, pay later loans in U.S. - CNBC

GameStop drops more than 12%, hits session lows after annual meeting fails to offer details on firm's strategy - CNBC

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

CFO at Rezolute, Inc. ($RZLT)

The CFO purchased 40,000 shares at $4.04/share ($162K total) which increased their vested holdings by 24.5%. The current price is $3.95 (-2.2%). Their median purchase size is $50,285.70 and this is their 2nd largest purchase out of 6 all time. (link)

Historic Returns
1m returns: 35% weighted | 32% median | 100% win rate (3/3)
3m returns: 153% weighted | 144% median | 100% win rate (2/2)
6m returns: N/A
1y returns: N/A

Note: 1 other insider also purchased the stock

LINKS YOU’LL LOVE

Nick Sleep: thinking about how to think: Short-term vs long-term

Are ShortTerm Performance and Value Investing Mutually Exclusive?

Buffett Letters from 1957 to 1970