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Top stock pitches (Wed, Sep 11)

Top stock pitches (Wed, Sep 11)

Connor Van Ooyen
September 11, 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!

Note: I will be out of the country for ~2 weeks, so I may miss a morning email or two while traveling.

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:

Axcelis Technologies (ACLS)

AppLovin Corporation (APP)

Customers Bancorp (CUBI) - short

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

WINNING PITCH

94% returns in 2 months

$RCAT was added to the website in early July and shared in this free morning email on July 15th.

It was also included in the Elite Investor Feed (link), which includes stock pitches from only the best investors in our database.

STOCK PITCHES

Author Returns

The below stock pitch is from Mason’s Substack.

Their historic returns are:

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

BLOG POST - Mason’s Substack

Axcelis Technologies: Potential Long-Term Compounder

Axcelis Technologies, Inc. designs, manufactures, and services ion implantation and other processing equipment used in the fabrication of semiconductor chips in the United States, Japan, Europe, and Asia Pacific.

Ticker: ACLS | Price: $97.63 | Price Target: $160 (+64%)
Market Cap: $3.18B | Timeframe: 12 months

⚡️ Ion Implantation | 📈 Bullish Idea

Axcelis Technologies (ACLS), a leader in ion implantation with 60% market share in the power segment, reported Q2 2024 revenue of $256.5 million and a 200 basis point margin decrease. The company is well-positioned to benefit from EV and alternative energy growth, CS&I expansion, and technological leadership. Risks include high China exposure (55%), cyclical industry downturns, and competition from Applied Materials. A DCF analysis yields a base case price of $160.50 and an upside of $174.17. With a strong management team focused on R&D and long-term growth, Axcelis operates in a high-barrier industry and is poised to capitalize on semiconductor advancements. The company's Purion systems cover all customer application requirements, and its niche focus differentiates it from larger suppliers. A 12-month price target of $160 is based on a weighted combination of DCF and multiples approaches.

Read the full article here. Read time: 8 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11514/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Hayden Capital.

Their historic returns are:

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

FUND LETTER - Hayden Capital

Hayden Capital Portfolio Holding: AppLovin Corporation

AppLovin Corporation engages in building a software-based platform for advertisers to enhance the marketing and monetization of their content in the United States and internationally.

Ticker: APP | Price: $87.75 | Price Target: N/A
Market Cap: $25B | Timeframe: N/A

📱 Mobile Ad Network | 📈 Bullish Idea

AppLovin Corporation (APP) is a leading mobile ad network, ranking third after Google and Meta, with projected 2024 revenues of $4.4B, EBITDA of $2.5B, and FCF of $1.8B. The company's Axon AI algorithm provides a significant competitive advantage, especially after Apple's ATT rollout and Unity's missteps. APP's strategic acquisitions of gaming studios and MoPub have bolstered its first-party data and mediation platform dominance. The company is expanding into e-commerce advertising, potentially driving further growth. Management expects 20-30% annual organic growth for the ads platform, with the possibility of 40-50% growth if AI improvements and e-commerce expansion succeed. Currently trading at ~12x EV/EBITDA (2024E), or ~15x for the ads platform alone, APP appears undervalued given its growth potential and AI-driven business model.

Read the full article here. Read time: 9 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11826/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Idea Brunch.

We have 33 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 - Idea Brunch

Idea Brunch with Nate Koppikar of Orso Partners - Customers Bancorp, Inc. (short)

Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to individual consumers, and small and middle market businesses.

Ticker: CUBI | Price: 48.64 | Price Target: N/A
Market Cap: $1.54B | Timeframe: N/A

🏦 Bank | 📉 Short Idea

Idea Brunch, the weekly newsletter where professional investors shares a couple of their stock pitches (it’s where this pitch is from), is offering Yellowbrick Road readers a 20% discount for life (link).

Customers Bancorp (CUBI) is a $1.64 billion market cap bank facing significant risks. The bank's poor deposit base, with 40% brokered deposits, and reliance on crypto deposits (about $4 billion) from companies like Circle, pose stability concerns. CUBI's earnings, inflated by the Fed's rate hikes, are vulnerable to rate cuts. The company has a history of questionable practices, including potential PPP loan fraud and undisclosed related party transactions, such as a $1 billion deposit from Circle, linked to a board member. Management issues include nepotism, weak internal controls, and regulatory concerns, evidenced by recent Federal Reserve sanctions for money laundering problems. The bank's auditor, Deloitte, has been alerted to these issues. CUBI's earnings power is heavily dependent on crypto deposits parked at the Fed overnight, masking underlying weaknesses. As rates fall or if crypto customers withdraw funds, CUBI's earnings are likely to decline significantly. The combination of regulatory scrutiny, poor governance, and reliance on volatile funding sources makes CUBI a risky investment.

Read the full article here. Read time: 6 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11461/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Hims & Hers Health, Inc. (HIMS) [62%]

🟨🟨⬜️⬜️⬜️ Upwork (UPWK) [24%]

🟥⬜️⬜️⬜️⬜️ Logista (LOG.MC) [14%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 60% bearish 📉

Stock Market News

Southwest shares tumble after airline overhauls board but keeps embattled CEO - New York Post

Ally Financial flags 'intensifying' credit challenges; shares slump - Reuters

Federal Reserve unveils toned-down banking regulation in victory for Wall Street - CNBC

Amazon makes £8 billion UK investment to build cloud and AI infrastructure - CNBC

Hearing aid makers slip after Apple rolls out hearing aid features, analysts shrug off threat - Reuters

New Starbucks boss lays out plan for first 100 days: ‘We're refocusing' - New York Post

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 V2X, Inc. ($VVX)

The Director purchased 3,125 shares at $48.00/share ($150K total) which increased their vested holdings by 8.1%. The current price is $48.57 (+1.2%). Their median purchase size is $23,272.00 and this is their 1st largest purchase out of 10 all time. link

4 other insiders also purchased the stock

LINKS YOU’LL LOVE

Ted Weschler's Final Fund Letter (2011) & What It Means for Berkshire Hathaway Today

Q&A with Li Lu

What You Don’t Know About Sell-side Analyst Price Targets

🎁 REFERRAL PROGRAM 🎁

Use your unique URL below or the share URL for any of the stock pitches to unlock insanely valuable awards.

Premium members have access to these awards here.

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.

Give me feedback in the poll below and share the newsletter with other investors if you find it useful!

Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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