Top stock pitches (Tue, Mar 19)

Author

Connor Van Ooyen
March 19, 2024

👋 Good Morning!

This is the Yellowbrick Road where I share the best stock pitches from billion-dollar hedge funds, professional analysts, millionaire investors, and more!

Our AI read and summarized 152 stock pitches, 1314 news articles, and 256 insider trades and found:

  • A real estate tech company with 270% upside (stock pitch)

  • Apple and Google in talks about AI (news)

  • The 3 biggest insider purchases (insider trade)

  • and more…

Thanks for reading! 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

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STOCK PITCHES

VALUE INVESTORS CLUB

SmartRent, Inc. - $SMRT

SmartRent, Inc., an enterprise real estate technology company, provides management software and applications to rental property owners and operators, property managers, homebuilders, developers, and residents in the United States and internationally

Ticker: SMRT | Price: $2.70 | Price Target: $10 (+270%)
Market Cap: $550M | Timeframe: 5 years

🏡 Real Estate Tech | 📈 Bullish Idea

SmartRent: SmartRent is a smart home solution provider targeting 28 million multifamily apartment units in the United States. The company expects to achieve 70% gross margins on recurring software revenue at scale. SmartRent is only 23% penetrated with existing clients who own 6.9 million units. The company has a backlog of 900,000 committed units. In the base case scenario, SmartRent is expected to generate a 26% IRR over 5 years. In the bear case scenario, the company is still expected to generate a 5% IRR. The key risks to the investment thesis include the ability to control costs and potential competition.

Read the full article here. Read time: 13 min

TWITTER

Evaluating Starbucks Corporation as an Undervalued Stock

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of coffee worldwide. The company operates through three segments: North America, International, and Channel Development

Ticker: SBUX | Price: $91.01 | Price Target: $121 (+33%)
Market Cap: $103B | Timeframe: N/A

☕️ Coffee Retailer | 💰 2.5% Dividend | 📈 Bullish Idea

Starbucks Corporation (SBUX), with its ticker symbol SBUX, is positioned as an undervalued stock trading with a next twelve months (NTM) P/E Ratio of 21.76x, which is below its 10-year mean of 28.71x, and a NTM Free Cash Flow (FCF) Yield of 4.06%, higher than its 10-year average of 3.14%. The valuation indicates that investors can expect approximately a 32% upside in earnings per share and a 29% additional FCF per share. Starbucks maintains a healthy balance sheet with $3.38B in cash and $13.60B in long-term debt, a BBB+ S&P credit rating, and a solid FFO Interest Coverage Ratio of 12.13x. It exhibits robust return on capital, expanding from 34.9% in 2018 to a predicted 33.2% in 2023, and a consistent track record of negative return on equity. Revenue growth shows a 9.23% CAGR from $14.87B in 2013 to $35.98B in 2023, and free cash flow increased from $1.76B to $3.68B in the same period, with share buybacks contributing significantly to EPS growth. With a dividend CAGR of 16.98%, rising from $0.45 in 2013 to $2.16 in 2023, and margins staying strong, Starbucks looks positioned for growth. Analysts foresee an EPS growth exceeding the required 10.88% CAGR for the years 2024 - 2026. Even at a conservative 21x P/E multiple, Starbucks shows an attractive CAGR potential, with even higher potential at 22x-23x multiples. Currently priced at $92.50, the stock offers a substantial margin of safety and is appealing for compounding returns in the mid-teens, suggesting that SBUX is an attractive investment opportunity.

Read the full article here. Read time: 2 min

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BLOG POST

Saker Aviation Services, Inc. - $SKAS

Saker Aviation Services, Inc., through its subsidiaries, operates in the aviation services segment of the general aviation industry in the United States

Ticker: SKAS | Price: $8.50 | Price Target: $21.85 (+157%)
Market Cap: $8.3M | Timeframe: 3 years

🛩️ Aviation Services | 📈 Bullish Idea

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

Saker Aviation Services (SKAS) is trading at 65-80% of liquidation value. The company is expected to win the Downtown Manhattan Heliport (DMH) contract for 5 or more years, which would generate over $1.1 million in free cash flow at a 13% yield. Saker has over $6 million in excess cash, which supports near-term distributions to shareholders and could result in a 26-37% IRR over a 3-year period. Risks include the possibility of further flight restrictions and unknown economics related to electric vertical takeoff and landing (eVTOL) aircraft.

Read the full article here. Read time: 12 min

Which stock idea was the most compelling to you?

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Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Foot Locker ($FL) [48%]

🟨🟨⬜️⬜️⬜️ Citizens Bancshares ($CZBS) [31%]

🟥⬜️⬜️⬜️⬜️ Envista Holdings ($NVST) [21%]

MARKET OVERVIEW / NEWS

Market Overview

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

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Yesterday’s Poll Results: 55% bullish

A little bit of a weird day with MicroStrategy getting crushed but Tesla up over 6%. It was a bit more bullish of a day overall as the large-cap indexes were all green (though the Russell continues to struggle), the Fear v Greed index gained a few points, the news index jumped another 0.100 points, and Yellowbrick Road readers got back above 50% bullish.

Stock Market News

Apple in talks to let Google's Gemini power iPhone AI features, Bloomberg News says - Reuters 

Tesla shares gain after Model Y price hike in U.S., Europe - Reuters 

Exclusive: Reddit's IPO as much as five times oversubscribed, sources say - Reuters 

Crafts retailer Joann files for bankruptcy after 81 years - Fox Business 

Homebuilder sentiment - turns positive for the first time since July - CNBC

Weight loss drug Wegovy is now approved for heart health — but that won't mean broad insurance coverage just yet - CNBC 

AstraZeneca to cap US out-of-pocket costs for inhalers to $35 - Reuters 

China drone maker EHang starts selling flying taxis on Taobao - Reuters 

TOP INSIDER TRADES

The insider trades are 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

10% Owner at Skye Bioscience, Inc. ($SKYE) purchased 450,000 shares at $10.00/share ($4.50M total) which increased their vested holdings by 4.6%. Their median purchase size is $8.26M and this is their 2nd largest purchase out of 2 all time (link)

Director at Globalstar, Inc. ($GSAT) purchased 660,000 shares at $1.46/share ($960K total) which increased their vested holdings by 5.3%. Their median purchase size is $1.11M and this is their 6th largest purchase out of 8 all time (link). 2 other insiders also purchased the stock

Chief Executive Officer at Traeger, Inc. ($COOK) purchased 396,689 shares at $2.35/share ($933K total) which increased their vested holdings by 2.5%. Their median purchase size is $431K and this is their 1st largest purchase out of 3 all time (link)

SECRET QUESTION

(Or if you’d rather not answer but still want the points, you can just reply and say hi!)

Secret Question: What was your most recent stock purchase? I’ve been sitting pretty still, but picked up a little bit of $ACIC after the earnings dip

THAT’S ALL FOLKS

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Connor

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