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Top stock pitches (Wed, Jun 19)

Top stock pitches (Wed, Jun 19)

Connor Van Ooyen
June 19, 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:

Sea Limited ($SE)

Marex Group ($MRX)

Littelfuse ($LFUS)

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 (you get a 20% discount using that link or the button below).

STOCK PITCHES

Author Returns

The below stock pitch is from Sleep Well Investments.

We have 17 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. Upgrade for 20% off.

BLOG - Sleep Well Investments

Sea Limited (SE) - Overcoming Sea Change Challenges, Time To Own The Business

Sea Limited, together with its subsidiaries, engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia, Latin America, rest of Asia, and internationally.

Ticker: SE | Price: $76.28 | Price Target: N/A
Market Cap: $41.62B | Timeframe: N/A

📦 Ecommerce | 🕹️ Gaming | 💸 Fintech | 📈 Bullish Idea

Sea Limited (SE), a $40B Southeast Asian e-commerce, fintech, and gaming titan, is significantly undervalued at its current market cap. Despite facing challenges such as aggressive expansion missteps and the COVID-19 pandemic, Sea has proven its resilience and adaptability, generating a $1.5B annual free cash flow run rate across its three segments: Garena, a gaming cash cow with the hugely popular Free Fire; Shopee, commanding over 50% of the Southeast Asian e-commerce market share with a widening logistics moat and advertising take-rate upside; and SeaMoney, a rising fintech star seamlessly integrated with Shopee. A conservative sum-of-parts valuation indicates a $44B value for Sea: $12B for Garena, $25B for Shopee, and $7B for SeaMoney. With a 20%+ growth runway, the main risks include the TikTok threat and Garena's longevity. Key metrics to track are Garena's MAU/bookings, Shopee's EBITDA/logistics, and SeaMoney's 20% growth target.

Read the full article here. Read time: 16 min

YELLOWBRICK PREMIUM

4 days left…

to upgrade to Yellowbrick Premium - the most valuable investing service on the internet - before the price increases.

One of the perks is the Real-Time Stock Pitch Feed.

It includes:

Real-time access to the stock pitch feed on the Yellowbrick website (free subscribers have a 30-day delay)
The current return of every stock pitch
The average returns for the authors of every stock pitch
The most important financial information for every stock pitch
30+ new stock pitches added every day
Search and filter the feed to only find stock pitches that match your criteria
An afternoon email with a short summary of every stock pitch added to the feed (including a section with any stock pitches from the top investors)

The Real-Time Stock Pitch Feed is how you find stock pitches like the one below which popped over 40% in less than two weeks (meaning it still isn’t available on the website for free subscribers).

Click the button below to see all of the Yellowbrick Premium perks and to upgrade before the price increases next week!

Author Returns

The below stock pitch is from @roojoo3.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

TWITTER - @roojoo3

Marex Group - new IPO at 7x P/E

Marex Group plc, a financial services platform, provides liquidity, market access, and infrastructure services to clients in the energy, commodities, and financial markets.

Ticker: MRX | Price: $19.40 | Price Target: N/A
Market Cap: $1.46B | Timeframe: N/A

💸 Financial Services | 📈 Bullish Idea

Marex Group (MRX), a recently listed futures and options clearer with a $1.4 billion market cap, grew profits by 44% in FY23 and 141% year-over-year in Q1 2024, trading at less than 8x P/E on annualized Q1 earnings compared to its closest peer, SNEX, at 10x, despite having a ROE of over 25% and 22% organic revenue growth from 2020-2023 (19% excluding NII). The company is well-positioned to benefit from attractive M&A opportunities as big banks like JPM are pushed out of the market due to different regulations under Basel III. However, a 100bps drop in rates could lead to an ~8% drop in PBT, with sensitivity increasing if the FF rate falls below ~150bps. Despite these risks, the stock remains overlooked, with helpful management commentary and limited investor attention.

Read the full article here. Read time: 1 min

Author Returns

The below stock pitch is from Capital Incentives.

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. Upgrade for 20% off.

BLOG - Capital Incentives

Littelfuse, Inc. - $LFUS

Littelfuse, Inc. designs, manufactures, and sells electronic components, modules, and subassemblies in the Americas, Asia-Pacific, and Europe. The company operates through Electronic, Transportation, and Industrial segments.

Ticker: LFUS | Price: $263.12| Price Target: $313 (+19%)
Market Cap: $6.16B | Timeframe: N/A

🔌 Electronics | 📈 Bullish Idea

Littelfuse (LFUS), a global leader in circuit protection, is well-positioned to benefit from the long-term secular growth trends of electrification and electronification across diverse end markets, including industrial, transportation, and electronics. The company has a strong track record of driving growth through strategic acquisitions, with M&A accounting for 9.3% of its 12.2% revenue CAGR since 2016, complementing its organic growth of 4%. Despite facing near-term headwinds from excess inventory in the channel and a recent product recall, Littelfuse's management team, led by experienced CEO David Heinzmann, is focused on leveraging its technical expertise, customer relationships, and targeted M&A to navigate the current cycle and drive long-term value creation. With an average EBITDA margin of ~21% over the last decade and ample capacity for further acquisitions, a discounted cash flow analysis suggests a fair value of $313 per share, representing a 26% upside from current levels, making Littelfuse an attractive investment opportunity for long-term investors at around $230 per share.

Read the full article here. Read time: 24 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Ulta Beauty ($ULTA) [40%]

🟨🟨⬜️⬜️⬜️ Interactive Brokers ($IBKR) [31%]

🟥⬜️⬜️⬜️⬜️ Imperial Petroleum ($IMPP) [29%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 55% bullish

Same old, same old in the market. A slightly green day with all of the indexes up a little bit, but all of the other sentiment checks remain unchanged. The Fear v Greed index is at “Fear” levels, the news sentiment is slightly bullish, and Yellowbrick Road readers remain bullish.

Stock Market News

Treasury yields retreat as weak retail sales raise concerns about consumer - CNBC

Nvidia passes Microsoft in market cap to become most valuable public company - CNBC

EV startup Fisker files for bankruptcy - Reuters

Warren Buffett buys Occidental shares for 9 straight days, pushes his stake to nearly 29% - CNBC

U.S. crude oil holds above $80 per barrel after starting week with strong gains - CNBC

McDonald's ends AI drive-thru trial after mishaps - including ice cream with bacon - Skynews

Amazon Labor Union votes to join forces with Teamsters - CNBC

AMD investigating claims that company data was stolen in hack - 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

Chairman & CEO at NewtekOne, Inc. ($NEWT)

The Chairman & CEO purchased 5,000 shares at $12.92/share ($64,590.00 total) which increased their vested holdings by 0.4%. The current price is $12.90 (-0.1%). Their median purchase size is $16,011.50 and this is their 8th largest purchase out of 68 all time. link