Top stock pitches (Tue, May 7)

Connor Van Ooyen
May 07, 2024

About // Sponsor YBR // Yellowbrick Website // Twitter

👋 Good Morning!

$MARA, $LCID, and $PLTR are all in the top 5 biggest gainers from yesterday which means the bulls are back out in full force (and Elon wants Buffett to invest in $TSLA right after he lays off 10k workers - link)!

Thanks for reading the Yellowbrick Road where I share the best stock pitches from fund letters, analyst reports, blogs, and more!

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

STOCK PITCHES

FUND LETTER

Greenhaven Road Capital Holding: PAR Technology Corporation

PAR Technology Corporation, together with its subsidiaries, provides omnichannel cloud-based hardware and software solutions to the restaurant and retail industries worldwide.

Ticker: PAR | Price: $44.90 | Price Target: N/A
Market Cap: $1.52B | Timeframe: 2025

💳 Restaurant POS | 📈 Bullish Idea

PAR Technology (PAR) is a restaurant POS company with a stable core business and significant growth potential under new CEO Savneet Singh. ARR per share has grown 8x in the past 5 years, and major growth drivers for 2024 include the rollout of systems to 7,000 Burger King locations ($20M+ ARR), Wendy's loyalty program ($6M ARR), and new products such as table service POS, online ordering, and payments. Recent acquisitions of Stuzo and TASK add scale, profitability, international markets, and customers like Starbucks and McDonald's. PAR expects ARR per share to reach $8.30 in 2024 and $10+ in 2025, with a transition to cash flow positive. The company's future looks bright, with potential upside from a 10x+ cash flow positive software company multiple expansion, although risks include integration and execution.

Read the full article here. Read time: 5 min

BLOG POST

Backblaze: The Cloud Dark Horse Ready to Disrupt the Industry

Backblaze, Inc., a storage cloud platform, provides businesses and consumers cloud services to store, use, and protect data in the United States and internationally. The company offers cloud services through a web-scale software infrastructure built on commodity hardware.

Ticker: BLZE | Price: $9.62 | Price Target: $20.14 (+110%)
Market Cap: $385M | Timeframe: 3 years

☁️ Cloud Services | 📈 Bullish Idea

Backblaze (BLZE), a cloud storage provider, is poised to benefit from the shift towards cheaper storage and the growth of AI. The company's B2 storage segment, which accounts for 50% of revenue, is growing at 30-40% with 70%+ gross margins. Backblaze is EBITDA profitable and expects to be FCF positive by 2025. Despite these strong fundamentals, the stock trades at just 2.2x 2024 sales compared to peers at 7-9x. The company's focus on simplicity, affordability, and reliability has helped it build a loyal customer base. Backblaze offers cheaper storage and egress fees than competitors like AWS, and its S3 compatible APIs and integrations make it easy for customers to switch and move data. With a price target of $20, representing a 104% upside, Backblaze presents an attractive investment opportunity in the rapidly evolving cloud storage and AI industries.

Read the full article here. Read time: 6 min

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FUND LETTER

Long Cast Advisers Added On Position: CoreCard Corporation

CoreCard Corporation, together with its subsidiaries, offers technology solutions and processing services to the financial technology and services market in the United States, Europe, and the Middle East.

Ticker: CCRD | Price: $12.75 | Price Target: N/A
Market Cap: $103M | Timeframe: N/A

🪪 Financial Processing Tech | 📈 Bullish Idea

CoreCard Corporation (CCRD), trading at around $11 per share or 3x non-Goldman revenues, presents a compelling investment opportunity despite near-term pressures from a repriced Goldman contract. The company, which processes the most successful credit card launch in history, is expected to see growth in the second half of 2024 once the repriced contract laps. Additionally, CCRD has approximately $25 million in annual contracted revenues from Goldman through 2025 and 2026, plus the potential for Apple to remain with CCRD even if it switches banks. With organic growth ahead and the market seemingly pricing in the worst-case outcome, the current uncertainty surrounding the Apple/Goldman situation appears to be an opportune time to invest in this small software company.

Read the full article here. Read time: 1 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Aware ($AWRE) [68%]

🟨🟨⬜️⬜️⬜️ Perrigo Company ($PRGO) [17%]

🟥⬜️⬜️⬜️⬜️ Ithaca Energy ($ITH.L) [15%]

Your comments:

🪪 steveng*** ($AWRE): The government ties are worth a lot. If this company is a takeover target, the price will skyrocket
🪪 burkh*** ($AWRE): This company’s technology is in great demand especially with an emphasis on the US increasing its oil production to reduce foreign dependency.They are not making much money, but insiders are buying and there is little short interest.
🪪 vandeh*** ($AWRE): When the net cash is like three fourths of the price, that's a pretty high floor

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 68% bullish

That biggest winners list is looking a lot like it does when the bulls take over and start pumping stocks like $MARA, $LCID, $PTON, etc.

We also had another day with all of the indexes up significantly, Yellowbrick Road Readers are closing in on 70% bullish, and the news sentiment is back up to bullish. The Fear v Greed index is the only sentiment gauge that continues to be bearish.

Stock Market News

Robinhood says SEC could pursue enforcement actions over its crypto operations, shares fall 2% - CNBC

Howard Schultz says Starbucks needs to revamp its stores after big earnings miss - CNBC

Palantir beats on revenue but gives lower-than-expected guidance - CNBC

Lucid posts quarterly revenue beat as luxury EV sedan price cuts boost sales - Reuters

Boeing's new Starliner capsule set for first crewed flight to space station - Reuters

Apollo-Sony bid for Paramount could face antitrust hurdles from feds: sources - New York Post

Tesla lays off more staff in software, service teams, Electrek reports - Reuters

European markets set to rise with global sentiment remaining stable after U.S. jobs data - CNBC

Citigroup CEO Jane Fraser says low-income consumers have turned far more cautious with spending - CNBC

Grayscale Bitcoin Trust's shares jump after first inflow since January - Reuters

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 DELTA AIR LINES, INC. ($DAL)

The Director purchased 10,000 shares at $49.50/share ($495K total) which increased their vested holdings by 0.0%. The current price is $51.55 (+4.2%). Their median purchase size is $1.00M and this is their 6th largest purchase out of 8 all time. (trade link)

LINKS YOU’LL LOVE

Why Generative AI has not produced real use cases (yet)

Every stock has a shelf life

The Keys to Successful Investing by Giverny Capital

THAT’S ALL FOLKS

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Connor

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