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Top stock pitches (Tue, Sep 17)

Top stock pitches (Tue, Sep 17)

Connor Van Ooyen
September 17, 2024

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

*This newsletter is for entertainment purposes only. Nothing in this newsletter is financial advice or recommendations.

Note: I am out of the country this week, so I am sending a shortened version of this email until I get back.

👋 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:

Shelly Group AD (SLYG.F)

Flowers Foods, Inc. (FLO)

M-Tron Industries (MPTI)

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.

STOCK PITCHES

Author Returns

The below stock pitch is from Arauca Capital.

We have 5 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.

FUND LETTER - Arauca Capital

Arauca Capital Portfolio Holding: Shelly Group AD

Shelly Group AD designs, manufactures, and distributes IoT products in Bulgaria, Germany, and the United States.

Ticker: SLYG.F | Price: 34.10 | Price Target: N/A
Market Cap: 631M | Timeframe: N/A

🤖 IoT | 📈 Bullish Idea

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

Shelly Group AD (SLYG.F) is a leading IoT company with exceptional growth, reporting 52% revenue growth in Q2 2024 and expanding margins. The company stands out for its multi-protocol compatibility and open-source customization, offering relays, smart switches, and smart plugs. Shelly's new Shelly X module aims to disrupt the OEM market, potentially surpassing its existing business. The company recently acquired LOQED smart locks, entering the security vertical. Shelly faces limited direct competition, with advantages over rivals like Plejd, Sonoff, and Fibaro in terms of functionality, pricing, and customization. Trading at 21x 2025E earnings and 15x 2026E earnings, Shelly offers potential upside from new verticals and expansion. The Shelly X module could capture a significant portion of Tuya's 150 million module market, with conservative estimates suggesting a 33% increase in net income if Shelly secures just 1/15th of the market.

Read the full article here. Read time: 9 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11441/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Stock Pickers Journey.

Their historic returns are:

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

BLOG POST - Stock Pickers Journey

Almost a Utility - Flowers Foods - FLO

Flowers Foods, Inc. produces and markets packaged bakery food products in the United States.

Ticker: FLO | Price: $22.87 | Price Target: N/A
Market Cap: $4.82B | Timeframe: N/A

🍞 Packaged Bakery Goods | 📈 Bullish Idea

Flowers Foods, Inc. (FLO) is a $5 billion company with a 20%+ share of the US bread market, offering brands like Wonder, Nature's Own, and Tasty Cake. The company aims for 1-2% sales growth, 4-6% EBITDA growth, and 7-9% EPS growth through acquisitions and buybacks. FLO offers a 4% yield and trades at 18x earnings, comparable to utilities but with potentially better growth prospects and fewer regulatory hurdles. The company is expanding into organic, gluten-free, and breakfast bar categories while exiting less profitable markets. Management, including former chairman George Deese and current chairman Ryals McMullian, owns $50-60 million in shares, ensuring alignment with shareholders. Despite its stability and growth potential, FLO is underappreciated by Wall Street, with only 1 buy recommendation out of 7 analyst ratings. The author suggests considering FLO as an alternative to utility stocks for investors seeking yield and steady growth.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11457/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from Hidden Gems Research.

Their historic returns are:

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

BLOG POST - Hidden Gems Research

Hidden Gem – M-Tron Industries (MPTI)

M-tron Industries, Inc. engages in the design, manufacture, and marketing of frequency and spectrum control products in the United States and internationally.

Ticker: MPTI | Price: $33.39 | Price Target: N/A
Market Cap: $93.44M | Timeframe: N/A

📡 Defense/Aerospace | 📈 Bullish Idea

M-Tron Industries (MPTI) is a specialized leader in frequency control products for defense, aerospace, and telecom markets, trading at a potential 20% discount to fair value. The company's competitive edge lies in rapid product innovation, vertical integration, and deep customer relationships. MPTI reported 16.4% year-over-year revenue growth and 36.6% net income growth in Q2, with no debt and 11% FCF margins. Management expects 7-9% revenue CAGR, with potential for higher FCF growth due to margin expansion. The company benefits from secular tailwinds in its end markets, including defense electronics (6% CAGR), commercial aviation (7% CAGR), and satellite communications (10% CAGR). MPTI's valuation assumes a 14% FCF CAGR over 10 years, which could be conservative given its growth trajectory and margin improvement potential. Key risks include customer concentration, cyclical demand, technological obsolescence, and production quality control. The company is exploring M&A opportunities to enhance growth and shareholder returns.

Read the full article here. Read time: 8 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11699/?ref=PLACEHOLDER

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Intel ($INTC) [48%]

🟨🟨⬜️⬜️⬜️ KBR ($KBR) [33%]

🟥⬜️⬜️⬜️⬜️ Microstrategy ($MSTR) [29%]

🎁 REFERRAL PROGRAM 🎁

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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

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