Top stock pitches (Tue, Jun 4)

Connor Van Ooyen
June 04, 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:

Duratec Limited ($DUR.AX)

CVR Partners, LP ($UAN)

StealthGas Inc. ($GASS)

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 YBR Portfolio and copied a trade from the #5 investor in our database who averages 90%+ 2-year returns on their stock pitches.

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

WINNING PITCH

+62% Returns in 6 Weeks for $TPC

This $TPC pitch was sent in the April 17th email (link) when the price was $13.55. The price is now up to almost $22 (+62%) just 6 weeks later. Pretty great returns for a “Deep Value” stock.

Shoutout to Miller Value’s Deep Value fund for the stock pitch.

STOCK PITCHES

Author Returns

The below stock pitch is from Sohra Peak Capital.

We have 8 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. Upgrade for 20% off.

FUND LETTER - Sohra Peak Capital

Sohra Peak Capital Portfolio Holding: Duratec Limited

Duratec Limited, together with its subsidiaries, engages in the provision of assessment, protection, remediation, and refurbishment services to a range of assets, primarily steel and concrete infrastructure in Australia. It operates through Defence, Mining & Industrial, Buildings & Facades, and Energy segments.

Ticker: DUR.AX | Price: AUD 1.12 | Price Target: N/A
Market Cap: AUD 257M | Timeframe: N/A

🏗️ Engineering / Construction | 🇦🇺 Australia | 💰 2.9% Dividend | 📈 Bullish Idea

* I recommend using Interactive Brokers (link) to trade international and OTC stocks if you can’t trade them in your current brokerage

Duratec Limited (DUR.AX) shares have declined 30% year-to-date despite affirming FY24 EBITDA guidance of 19-24% growth and reporting an all-time high $1.47B tender book (+44% QoQ), signaling further FY25 growth. The market's short-sighted reaction to lower-than-expected order book figures and a decrease in net working capital fails to consider the complete picture, which includes strong tender activity, growing MSA revenue and profit, and significant EBITDA contributions from subsidiaries DDR and RCC. Despite project award delays, Duratec is well-positioned to deliver +15% FY25 earnings growth based on these factors. At $1.06/share, Duratec trades at 11.7x estimated FY24 earnings, presenting an attractive opportunity given its expected double-digit average profit growth rate for the foreseeable future in large addressable markets.

Read the full article here. Read time: 4 min

Author Returns

The below stock pitch is from kevin155 on Value Investors Club.

Their historic returns are:

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

VALUE INVESTORS CLUB - kevin155

CVR Partners, LP - $UAN

CVR Partners, LP, together with its subsidiaries, engages in the production and sale of nitrogen fertilizer products in the United States. The company offers ammonia products for agricultural and industrial customers; and urea ammonium nitrate products to agricultural customers, as well as retailers and distributors.

Ticker: UAN | Price: $81.64 | Price Target: $198 (+143%)
Market Cap: $860M | Timeframe: within the year

🐮 Agriculture | 💰 11% Dividend | 📈 Bullish Idea

CVR Partners, LP (UAN), a nitrogen fertilizer producer controlled by Icahn Enterprises (IEP), trades at a 17% normalized free cash flow yield and 6.7x normalized EBITDA of $200 million, based on a 7-year average EBITDA of $183 million from 2017-2023. Recent industry sales of ammonia plants, WALA at $1,900/ton and IFCO at $4,200/ton of ammonia capacity, suggest UAN's assets could be valued at $2,500-$3,000/ton, implying a share price of $157-$198 (2-2.5x the current $79 price). IEP is considering strategic options, including a potential sale of UAN, which could unlock significant value for shareholders. Downside is protected by UAN's strong free cash flow generation, while upside could be realized through a sale to a strategic buyer.

Read the full article here. Read time: 5 min

Author Returns

The below stock pitch is from @smantel on Twitter.

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. Upgrade for 20% off.

BLOG POST - @smantel

StealthGas Inc. (GASS) Reports Record Q1 Results, Eyes Significant Growth with Fleet Upgrades

StealthGas Inc., together with its subsidiaries, provides seaborne transportation services to liquefied petroleum gas (LPG) producers and users worldwide.

Ticker: GASS | Price: $8.46 | Price Target: $14 (+65%)
Market Cap: $306M | Timeframe: N/A

🚢 Shipping | 📈 Bullish Idea

StealthGas Inc. (GASS), trading at $8.46 with a 25.6M float and 1% short interest, is the cheapest LPG shipper compared to peers NVGS and LPG, despite reporting record net income and EBITDA in Q1 with fewer ships. The company sold a vessel and reduced debt by $53M post-Q1, leaving no material maturities until December 2025. Management expects a $0.25 EPS gain in Q2 from the sale and is upgrading its fleet to capitalize on the robust LPG market, driven by increased demand from China's PDH capacity and India's fuel gas subsidies. With $5M remaining in its buyback program and 73% of 2024 revenue contracted, GASS trades at just 3x 2024E EV/EBITDA and 0.6x NAV, presenting a compelling investment opportunity with a price target of $14 for 65% upside.

Read the full article here. Read time: 2 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ TAT Technologies ($TATT) [56%]

🟨🟨⬜️⬜️⬜️ R1 RCM Inc. ($RCM) [24%]

🟥⬜️⬜️⬜️⬜️ Open Text Corporation ($OTEX) [20%]

Your comments:

✈️ vande*** ($TATT): Guaranteed customers are rare

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 60% bullish

It was the second day in a row that the markets rallied into the close, though the Dow and Russell didn’t make it back to green this time. A few Mexican stocks got hit hard after the elections and $GME popped again after Roaring Kitty bought a bunch. Overall, everything is sitting fairly neutral with the news sentiment slightly bearish and the Fear v Greed index almost perfectly neutral.

Stock Market News

Spotify to raise price of premium individual plan - Reuters

India stocks hit record highs as exit polls predict a decisive Modi win - CNBC

Microsoft confirms layoffs in mixed reality but will keep selling HoloLens 2 headsets - CNBC

E*Trade considering kicking Keith Gill off its platform, WSJ reports - Reuters

Cisco-owned ThousandEyes launches AI to predict and fix internet outages, teases ChatGPT-style tech - 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

Director at Biohaven Ltd. ($BHVN)

The Director purchased 28,000 shares at $35.58/share ($996K total) which increased their vested holdings by 0.4%. The current price is $35.10 (-1.3%). Their median purchase size is $1.00M and this is their 11th largest purchase out of 18 all time. (trade link)

LINKS YOU’LL LOVE

Top 5 Lessons from Warren Buffett

Exploring the hook, links, and frustration

The Extraordinary Life of Charlie Munger

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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