🤖📈 Top Stock Trade Ideas for July 19

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The best investments are not in stocks that everyone praises, but in stocks that everyone underappreciates. That in one sentence sums up our investment in Stellantis. We think we are once again in a situation where the market is deeply undervaluing the Stellantis stock. Consider for yourself: Stellantis is a solid business. It has some of the highest, if not the highest, margins in the industry, and that is before savings from the integration of Peugeot and Fiat Chrysler are fully realised. Management plans to move from the current level of EUR 180 billion in sales to EUR 300 billion by 2030. So, it is a decently profitable and growing business. We can also find net cash (cash minus debt) of EUR 23 billion on its balance sheet. The individual Stellantis brands (Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Maserati, Ram, Opel, Lancia, Vauxhall, Peugeot and others) cover different market segments – from the very low end to luxury – as well as different regions.

We consider the management to be excellent and the controlling shareholders to be very responsible. In the capital allocation story, dividends and shares buyback play big roles. That all looks good. So, what is the market telling us through the share price? The stock is trading at three times annual earnings. If you subtract net cash, which is close to half the market capitalisation, you get to 1.5 times annual earnings. That valuation is, in a word, crazy. Add to that a dividend yield of 8.5%, plus share buybacks, and the stock would still be cheap even at twice the price. All in all, after 15 years of watching developments, we have run out of excuses not to buy the stock. It would be a shame not to take advantage of this opportunity.

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The author recommends investing in SS&C Technologies, giving it a strong buy rating and a price target of $80. They highlight that SS&C has built a strong moat through its reputation, industry position, and client retention. The company is deleveraging and expanding margins, and the author believes that consensus estimates will be surpassed, with potential synergies from mergers and acquisitions not factored in. The management team suggests that the stock price is cheap, and the company has a high dividend that is continuously growing. SS&C has a diverse product portfolio and a well-diversified client base. They have a history of acquisitions and a strong presence in the fintech space. The company is highly profitable and cash generative, with high gross and EBITDA margins. The author believes that SS&C is undervalued compared to its competitors and its own historical valuation metrics. They conduct a DCF analysis and set a 12-month price target of $80. However, there may be challenges such as implementation delays and potential economic downturns. Despite this, the author sees SS&C as a strong investment opportunity.

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Cove Street Capital believes that Ecovyst Inc. is an undervalued company with a strong position in the natural gas refining and sulfur disposal industry. The company benefits from long-term contracts with customers and has a margin-enhancing side business in waste disposal facilities. The main risk for Ecovyst is the potential decline in demand due to the increasing adoption of electric vehicles and refinery shutdowns. However, the author argues that the push for green energy is premature and that Ecovyst will remain relevant for at least the next 15 years. The company has shown consistent growth and high profit margins, and there is speculation that a private equity firm may consider selling the company at a low multiple. The company has a large shareholder owning 70% of it, presenting an opportunity for other investors. The company's valuation is currently trading at around $12 per share, with a market cap of 1.5 billion and an enterprise value of 2.3 billion. The company has high-quality assets and a stable business in the refining industry. The new CEO and board may impact future decisions, including share buybacks and increasing leverage. The company's long-term contracts provide pricing power, but any disruption in their pipeline could negatively impact the company and its customers.

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