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🤖📈 Top Trade Ideas for July 10
Huge upside for Unity in AR/VR, a Morningstar analyst sees 164% upside for Gap, and more...
Connor Van Ooyen
July 10, 2023
👋 Hello!
Welcome to the 1,341 new Yellowbrick Road readers who joined since the last issue.
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Our AI read and summarized 183 articles today from all over the internet to find the best trade ideas to help you make more money in the stock market.
What you’ll find in this email:
🥽 Huge upside for Unity in AR/VR
🐻 The bearish v bullish case for U
📞 [Premium] Morningstar analyst sees 164% upside potential for Gap
🤖📈🚗📱 Much more…
*If you missed Friday’s email, you can read it here
💰 Today’s Featured Trade Ideas
The three best trade ideas our AI tool found today. Make sure to vote on your favorite!
🥇 Unity's Unique Competitive Advantage Explained (link)
Ticker: $U | Current Price: $40.46 | Price Target: $130 (221%)
🕹️ Gaming | 🥽 AR/VR | 🏷️ Undervalued | 📈 Long Idea
The author is bullish on Unity and sees it as a good investment opportunity. They have a significant investment in Unity, which represents about 50% of their portfolio exposure. Unity's competitive advantage lies in its ecosystem and synergistic revenue model. The company has positioned itself as a comprehensive solution for creating and operating real-time 3D content. Strategic acquisitions have strengthened Unity's position in the market. Unity's partnership with AAPL provides access to a large developer base and is seen as a catalyst for growth. The author believes that Unity has several growth drivers that could help it surpass its guided $1 billion EBITDA in 3-5 years. They estimate that Unity could achieve around $2 billion in net income in the same timeframe. The author plans to invest in long-dated call options on Unity and expects the launch of the Vision Pro to be a catalyst for higher implied volatility. They give Unity a "Strong Buy" rating.
Click here to read the full article
🥈 Williams Sonoma (link)
Ticker: $WMS | Current Price: $112.70 | Price Target: N/A
🍳 Cookware | 🛍️ Retail | 📈 Long Idea
The author evaluates the fundamental health of Williams-Sonoma, a consumer retail company that sells kitchenware and home furnishings. The company meets the author's criteria and is considered a leader in high-quality cookware and tools. Williams-Sonoma has a strong digital platform and has invested in technology and supply chain to support e-commerce growth. The company recognizes the importance of physical stores and has put investments in AI, VR, AR, and 3D modeling on hold due to the pandemic. Williams-Sonoma is expanding its manufacturing and fulfillment capability and leveraging its omnichannel network to mitigate shipping constraints. The management, including CEO Laura Alber, is evaluated positively, with effective capital allocation and a sustainable dividend. The bull case for Williams-Sonoma includes aggressive share buybacks and potential long-term growth in the home industry market. However, consumer spending and competition are bearish factors that could impact the company.
Click here to read the full article
🥉 Energy Transfer: The Lake Charles Debacle And Why You Should Buy (link)
Ticker: $ET | Current Price: $12.75 | Price Target: $19.12 (+50%)
🛢️ Oil/Gas | 🚢 Shipping | 🚨 Event Driven | 📈 Long Idea
The Lake Charles project has been a problem for Energy Transfer, with setbacks due to regulatory changes by the US Department of Energy. The project has approval to export natural gas and is seen as valuable for the domestic natural gas market. However, the DOE's decision on the export license is uncertain and may be politically motivated. The timing of the final investment decision is also uncertain. The author argues that the potential upside for Energy Transfer's stock is significant, with a potential increase of over 50% if the project succeeds. The downside risk is considered minimal as the project is not heavily built into the stock price. The author believes that once the project becomes official, the stock price will significantly rise and Energy Transfer will become a global leader in natural gas exports. However, there are risks to this analysis, including the failure of the project and oversaturation of the export market. Overall, the author sees this as a strong buy opportunity with high upside potential.
Click here to read the full article
Which featured trade idea was the most compelling to you? |
Friday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Taiwan Semiconductor ($TSM) [60%]
🟨🟨⬜️⬜️⬜️ Meta ($META) [30%]
🟥⬜️⬜️⬜️⬜️ RCI Hospitality ($RICK) [10%]
Your Thoughts:
⚡️ mk4*** ($TSM): It obviously has some risks with China, but they might literally be the most important company in the world and are necessary for all the advancements in things like AI and autonomous vehicles.
💃 dan*** & nak*** ($RICK): Very convincing earnings and large potential to continue acquiring nightclubs and growing
🤔 Stock Market Quiz
Which company conducted the largest initial public offering (IPO) in history? |
Yesterday’s Question: The SEC banned this practice after the 2008 financial crisis as it was partly blamed for the downfall of Lehman Brothers and other big banks.
Answer: Naked Short Selling (56% of you got it correct!)
🐻 Bearish v 🐂 Bullish
Company: Unity ($U)
Bullish Reasons:
Dominance in Game Development: Unity is the de facto tool for game development outside of Asia, with over 70% of games built in Unity. This dominance could provide a competitive advantage and potential for growth
End-to-End Platform: Unity believes that its combination with ironSource provides a unique end-to-end platform that solves more of its customers' toughest challenges, enabling it to accelerate its revenue growth, making Unity cash flow positive and add new capabilities and amazing leaders
Pricing and Packaging Change: Unity announced and launched a significant pricing and packaging change within its Unity Pro, Unity Enterprise, and Unity Industrial Collection offerings. The company raised the price between 13% and 25% across these offerings, the first significant price change in three years
Bearish Reasons:
Securities Class Action: Unity, its CEO, CFO, and General Manager of Operate Solutions, as well as Unity shareholders, are facing a securities class action. The complaint alleges that the company and its executives made false or misleading statements and/or failed to disclose issues with the company’s product platform and the likely impact of those issues on the company’s fiscal 2022 guidance
Dependence on Customer Success: Unity's success depends in part on the ability of its customers to market and sell games that are created or operated with its solutions. If its customers’ marketing efforts are unsuccessful or if its customers experience a decrease in demand for their games, sales of Unity's Create Solutions and its Grow Solutions could be reduced
Impact of Macroeconomic Trends: Recent negative macroeconomic factors, such as inflation, corresponding heightened interest rates, limited credit availability, and the strengthening of the U.S. dollar, could have an adverse impact on Unity's business
Are you bullish or bearish on Unity? |
Friday’s Results for $META (link):
🟩🟩🟩⬜️⬜️ 🐂 Bullish (62%)
🟨🟨⬜️⬜️⬜️ 🐻 Bearish (38%)
📈 Premium Trade Ideas
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