Top stock pitches (Wed, Aug 7)

Connor Van Ooyen
August 07, 2024

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*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:

Kraken Robotics (PNG.V)

NEXGEL (NXGL)

Uber Technologies, Inc. (UBER)

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

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*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).

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Yellowbrick Premium Portfolio returns - started in mid-May

WINNING PITCH

+44% in 1 Month

Great pitch for Canadian biotech company $CPH.TO by @hcapinvesting. It was added to the Yellowbrick website and shared in the premium email on July 8th.

You can find the pitch here.

STOCK PITCHES

Author Returns

The below stock pitch is from Deep Sail Capital.

We have 4 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 - Deep Sail Capital

Deep Sail Capital Partners Portfolio Holding: Kraken Robotics Inc.

Kraken Robotics Inc., a marine technology company, engages in the design, manufacture, and sale of sonar and optical sensors, batteries, and underwater robotic equipment for unmanned underwater vehicles used in military and commercial applications.

Ticker: PNG.V | Price: 1.13 | Price Target: 5.74 (+408%)
Market Cap: 270M | Timeframe: N/A

🐟 Marine Technology | 📈 Bullish Idea

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

Kraken Robotics (PNG.V), a leader in marine technology, offers unique SEAPOWER batteries capable of 6000m depth operations, with a $5.74 2026 price target (400% upside). The company's partnership with Anduril could generate $600M/year in revenue, with 2024 guidance at $90-100M. The base case assumes 40 Dive-LD/year and 5 Ghost Shark systems by 2026, while the downside case still offers 82% upside without Anduril. Trading at 13.9x 2024 EBITDA, Kraken's product portfolio includes KATFISH, AQUAPIX, and ALARS, serving industries like defense and renewable energy. The company's pressure-neutral subsea batteries have no known competitors at the same depth and energy density. Management, led by CEO Greg Reid, has a strong track record of expansion and strategic acquisitions. Kraken's growth prospects are driven by the Anduril Dive-LD opportunity, Extra Large AUVs, and expanding sensor and services businesses. As a potential acquisition target for Anduril and with its unique position in the growing AUV market, Kraken presents an attractive investment opportunity.

Read the full article here. Read time: 7 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7349/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Ahead of the Curve.

Their historic returns are:

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

BLOG POST - Ahead of the Curve

Nexgel: Who knew hydrogel could be so exciting?

NEXGEL, Inc. manufactures and sells high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels for wound care, medical diagnostics, transdermal drug delivery, and cosmetics in the United States.

Ticker: NXGL | Price: $2.66 | Price Target: $5.50 (+107%)
Market Cap: $18.23M | Timeframe: near future

🩺 Hydrogel / Medical | 📈 Bullish Idea

NEXGEL (NXGL) is a hydrogel maker experiencing 80% revenue growth with a monopoly in its niche and expanding margins. The company has multiple growth catalysts, including an AbbVie deal potentially adding $10M+ in annual recurring revenue, a STADA partnership opening the European market, and medical devices launching in 2025. Amazon sales are expected to reach $2.5-3M, and the Kenkoderm acquisition is accretive. Management forecasts 2025 revenues of $13.7M+ and EBITDA of $2.35M+, though these estimates are conservative. NXGL trades at 8x conservative forward EBITDA, suggesting significant undervaluation. The company has high insider ownership and a strong management team. Risks include tight cash flow and outstanding warrants. With multiple growth avenues and partnerships with industry leaders, NXGL appears poised for substantial growth, potentially doubling its market cap in the near future.

Read the full article here. Read time: 13 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7477/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from Optimist Fund.

We have 11 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 - Optimist Fund

Optimist Fund Portfolio Holding: Uber Technologies, Inc.

Uber Technologies, Inc. develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia excluding China and Southeast Asia.

Ticker: UBER | Price: $64.11 | Price Target: N/A
Market Cap: $140B | Timeframe: N/A

🚗 Ride Sharing | 📈 Bullish Idea

Uber Technologies, Inc. (ticker: UBER) reported a year-over-year increase in bookings, adjusted EBITDA, and free cash flow by 20%, 82%, and 148%, respectively, along with strong guidance for Q2 that suggests possible growth acceleration. Despite these robust quarterly results, Uber's shares experienced a mid-single-digit decline during the quarter, which we attribute to heightened discussions surrounding Tesla's ambitions in the robo-taxi market.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7464/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ CNH Industrial N.V. (CNH) [50%]

🟨🟨⬜️⬜️⬜️ Xponential Fitness (XPOF) [31%]

🟥⬜️⬜️⬜️⬜️ Webster Financial Corporation (WBS) [19%]

Your comments:

🚜 vande*** ($CNH): People will always need to eat

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 38% bullish

Stock Market News

Uber reports better-than-expected results for second quarter - CNBC

Airbnb shares drop 14% on earnings miss as company warns of slowing U.S. demand - CNBC

Yum Brands falls short on revenue as Pizza Hut and KFC same-store sales fall - CNBC

Disney raises streaming prices for Disney+, Hulu and ESPN+ - CNBC

Kellanova Surges On Potential Mars Buyout - Forbes

Waymo to expand autonomous ride-hailing service areas in Los Angeles, San Francisco - 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 Alphatec Holdings, Inc. ($ATEC)

The Director purchased 40,000 shares at $6.56/share ($262K total) which increased their vested holdings by 20.2%. The current price is $6.55 (-0.2%). Their median purchase size is $289K and this is their 2nd largest purchase out of 2 all time. link

Note: 1 other insider also purchased the stock

LINKS YOU’LL LOVE

Transcript of David Einhorn’s Speech at the Value Investing Congress

Bill Ackman: Everything You Need to Know About Finance and Investing in Under an Hour

What has worked in investing: studies of investment approaches and characteristics associated with exceptional returns

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THAT’S ALL FOLKS

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Connor

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