Top stock pitches (Tue, Sep 3)

Connor Van Ooyen
September 03, 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:

WideOpenWest (WOW)

Harrow, Inc. (HROW)

PAR Technology Corporation (PAR)

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.

YB Premium Portfolio returns - started mid-May

📢 IN CASE YOU MISSED IT 📢

25 more stock pitches from Q2 fund letters

It was my fault for posting this on a holiday weekend, but a lot of followers missed my Twitter/X thread with 25 new stock pitches from Q2 fund letters.

These are the best investors in the world sharing which stocks they are buying.

25 more stock pitches from 25 different Q2 fund letters (pt 2 since the first one was well-received):
— Yellowbrick Investing (@joinyellowbrick)
1:57 PM • Aug 31, 2024

STOCK PITCHES

Author Returns

The below stock pitch is from Idea Hive.

We have 10 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.

BLOG POST - Idea Hive

New Portfolio Idea — WOW

WideOpenWest, Inc. provides high speed data, cable television, and digital telephony services to residential and business services customers in the United States

Ticker: WOW | Price: $5.52 | Price Target: $10 (+81%)
Market Cap: $467M | Timeframe: N/A

🗼 Broadband | 🚨 Event Driven | 📈 Bullish Idea

WideOpenWest (WOW), a $465m market cap cable and fiber broadband provider, is currently undervalued in a pending takeover bid at $4.80/share from major shareholder Crestview Partners and DigitalBridge. The offer values WOW at 5x TTM EBITDA, significantly below industry transaction ranges of 5-10x, peer valuations of 6-7x, and the company's own asset sales at 11x EBITDA in 2021. The bid also undervalues WOW at $680 per passing compared to its $1,050 build cost. Several equity holders oppose the offer, arguing it's opportunistic and comes just before a potential Q1'24 inflection point marked by stabilizing subscribers and the near-completion of the fiber build-out. With improved operational performance, declining capex, and maturing fiber assets, WOW is poised for significant cash flow generation. A higher bid could potentially reach $8.8+/share (50%+ upside), valuing the existing business at 5.6x EBITDA and fiber assets at cost. While there's a 'no deal' risk, the likelihood of buyers walking away is considered minimal due to their industry expertise and awareness of WOW's underlying value.

Read the full article here. Read time: 7 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11277/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Simon’s Substack.

We have 2 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.

BLOG POST - Simon’s Substack

Harrow, Inc.: Blinded by the light

Harrow, Inc., an eyecare pharmaceutical company, engages in the discovery, development, and commercialization of ophthalmic pharmaceutical products.

Ticker: HROW | Price: $40.46 | Price Target: N/A
Market Cap: $1.44B | Timeframe: N/A

💊 Pharmaceutical | 📈 Bullish Idea

Harrow, Inc. (HROW) reported strong H1 2024 growth across all segments, with Iheezo rebounding and Veyve showing promising results. ImprimisRX is expected to grow 10% in FY24, and Triesence is likely to launch in Q4. Revenue guidance is now >$180M, potentially exceeding $200M excluding Triesence. However, expenses are outpacing revenue growth (78% vs 40% YoY), and cash burn continues, although high accounts receivable partially explains this. The company's valuation is lofty but supported by high growth and significant total addressable market potential. While Harrow remains unprofitable, it has easy access to cash through equity raises at current stock prices. CEO Mark Baum's charisma is noted as an asset in capital markets. The stock has been hitting new all-time highs, but investors should be aware of the ongoing cash burn and expense growth outpacing revenue increases.

Read the full article here. Read time: 5 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11380/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from Greenhaven Road Capital.

We have 39 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 - Greenhaven Road Capital

Greenhaven Road Capital Main Fund Portfolio 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: $53.99 | Price Target: $80 (+48%)
Market Cap: $1.96B | Timeframe: N/A

🥤 Restaurant Tech | 📈 Bullish Idea

PAR Technology Corporation (PAR) has undergone significant transformation in H1 2023, acquiring Stuzo and TASK, selling its defense business, and beginning POS rollouts for Burger King and Wendy's. New products for convenience stores are in development, including a payments solution and POS offering. The company expects to be EBITDA positive in Q3 2023, with potential 2024 EBITDA of $40-60M+ versus $18M consensus. Analyst estimates are outdated (November 2023) and don't reflect recent developments. PAR aims for 25%+ software growth and to be a Rule of 40 software company in 2024. With improved gross margins, higher growth, and anticipated profit inflection, the company has a price target of $80 (approximately 70% upside from the current $47). The sale of the defense business positions PAR closer to a pure-play software company, likely leading to changes in financial reporting to highlight its software business attractiveness.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11374/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Pinterest ($PINS) [43%]

🟨🟨⬜️⬜️⬜️ Treehouse Foods ($THS) [32%]

🟥⬜️⬜️⬜️⬜️ Evolution Gaming ($EVO.ST) [25%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 50% bullish

Stock Market News

The Fed's favorite inflation indicator increased 0.2% in July, as expected - CNBC

Dell beats estimates as server sales soar 80%, riding AI wave - CNBC

MongoDB shares surge 15% on guidance boost - CNBC

Solid US consumer spending pushes against hopes for hefty Fed rate cut - Reuters

US drillers cut oil and gas rigs for third week in a row - Baker Hughes - Reuters

FEATURED INSIDER TRADE

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Director at Blue Owl Capital Corp ($OBDC)

The Director purchased 2,500 shares at $15.02/share ($37,550.00 total) which increased their vested holdings by 38.4%. The current price is $15.10 (+0.5%). Their median purchase size is $38,670.00 and this is their 3rd largest purchase out of 3 all time. link

LINKS YOU’LL LOVE

Top insider trades last week

8 Cutting Edge Investing Principles of Philip Fisher

The Best of Charlie Munger

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THAT’S ALL FOLKS

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Connor

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