🤖📈 Top Trade Ideas for August 4

The author expresses strong bullish sentiment for Paypal, asserting that the recent 16% drop in its stock price, despite robust earnings and deferred free cash flow (FCF), presents an advantageous buying opportunity and the author bought 6-figures of PYPL stock. The author notes Paypal's current 2017-equivalent valuations, despite the addition of 250 million more customers, less shares, and significantly increased revenue, with projections of upwards of $40 billion by 2026. The potential for substantial share buybacks, strong institutional ownership, a new CEO, and healthy bonds further strengthen Paypal's position. The author also praises Paypal's unique value in safe overseas transactions and anticipates continued user growth, especially overseas. Paypal's ownership of various companies like Venmo, Honey, and Zettle, each presenting their own growth opportunities, adds to its appeal. The author dismisses concerns about competition, citing room for industry growth and Paypal's maintained moat. Despite economic recessions, Paypal is expected to thrive as a crucial platform for the gig economy and new businesses. The author ultimately envisions a considerable potential for increased shareholder value through share buybacks and dismisses concerns about FED Now replacing Paypal. The author's price target is not stated explicitly, but they maintain a confident long-term bullish outlook, backing their assertions through their own significant investments in Paypal.

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Enphase, a company known for its innovation and superior microinverter technology in the growing global solar energy market, faces mixed circumstances. On the positive side, Enphase's competitive advantages lie in technology, switching costs, and cost advantages. Growth in gross profit and gross margins, a strong balance sheet with a significant net cash position, and encouraging international growth, particularly in Europe, are among the company's strong points. It's expanding its product ecosystem, which benefits from government policies supporting solar system adoption. The author projects a revenue run rate of $12.8 billion by 2032 and sets a price target of $226, suggesting a 60% upside. However, Q2 earnings were disappointing, causing a significant stock price drop and raising concerns about slowing revenue growth. Other issues include potential impact from high interest rates, a weak near-term outlook, the possibility of reduced solar PV system demand in California, and fierce industry competition, including from Tesla in the battery sector. Nevertheless, management's $6 million purchase of Enphase stock and Enphase's attractive investment profile in cleantech suggest a positive long-term outlook.

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The author is bullish on Kimbell Royalty Partners, based on their recent $455 million acquisition from LongPoint Minerals II, which is anticipated to boost distributable cash flow in the near-term and yield a 13.1% return at the current unit price. However, the long-term impact is uncertain due to the potential conversion of Series A Preferred Units to common units. While Q2 2023 production fell slightly short of guidance, the LongPoint assets are expected to contribute significantly to Kimbell's production, with an estimated increase to over 24,000 BOEPD in 2024. Furthermore, the acquisition is projected to add net DUCs, permitted locations, and increase net wells per year, boosting Kimbell's inventory. Despite potential dilution from the conversion of Series A Preferred Units, the author maintains an estimated value of $19 per unit for Kimbell's common units, foreseeing the acquisition to positively impact Kimbell's distribution for the next two years. The author emphasizes a possible 12% increase in distributable cash flow with the acquisition at current strip prices and maintains a positive outlook for the firm's potential to generate substantial cash flow per unit in 2024.

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