🤖📈 Top Trade Ideas for June 22

Including a SaaS company serving the service-economy, the strong growth potential for DraftKings, and much more...

Author

Connor Van Ooyen
June 22, 2023

Our AI read and summarized 193 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:

  • 💻 A service-economy SaaS company with 69% upside potential

  • 🐻 The bearish v bullish case for DraftKings

  • 📉 [Premium] Popular hedge fund shorts a fraudulent company

  • 🤖📈🚗📱 Much more…

*If you missed yesterday’s email, you can read it here

💰 Today’s Featured Trade Ideas

The three featured trade ideas our AI tool found today. Make sure to vote on your favorite!

🥇 TE Connectivity: Connecting The World One Step At A Time

Ticker: $TEL | Current Price: $135.80 | Price Target: $240 (+77%)

🚗 Auto | 🚙 EV | 🏭 Sensor Manufacturer | ✏️ Blog Post | 📈 Long Idea

TE Connectivity Ltd. is a global connectivity and sensor solutions manufacturer with three primary segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. The company is well-balanced geographically, with a 1/3 split across the Americas, APAC, and EMEA regions. TE Connectivity is well-positioned to benefit from the electrification boom in the automotive industry, with estimates that they make $140 per EV and only $60 from ICE vehicles. The company is also focusing on the APAC region to tap into the growing electric vehicle market. TE Connectivity's business segment diversity is a strength, with a wide range of products offered to a substantial customer base. The company's impressive FCF yield and dividend yield stand out, and most analysts on the street are either bullish/overweight or neutral/equal weight with price targets averaging at around $142/share. The author predicts a future share price of $230.96 using the EV/EBITDA valuation and $240.34 using the combined equal weighting model. The author believes it is a great time to invest in TE Connectivity Ltd.'s stock, as the company is strategically acquiring bolt-on companies and restructuring to improve operations, and investors are not pricing in the potential of the company's involvement in the EV and AI industries.

🥈 DraftKings: Full Steam Ahead

Ticker: $DKNG | Current Price: $24.95 | Price Target: N/A

🎰 Sports Gambling | ✏️ Blog Post | 📈 Long Idea

The author is bullish on DraftKings, citing momentum in newly-added states and the company's ability to grow active users organically. DraftKings has reduced marketing spend and improved gross margins without impacting growth rates. The company aims to diversify beyond sports, including casino gaming and NFTs, and generate substantial adjusted EBITDA profits by the end of 2023. Q1 revenue surged 84% YoY, beating expectations, and the company boosted its full-year guidance. Customer acquisition costs declined, while new customers grew, helping DraftKings bring its gross margins up. The company's renewed focus on profitability, growth potential with additional state legalizations, and ability to reduce customer acquisition costs are reasons to continue banking on upside.

🥉 EverCommerce: Continue To Stay Long As Growth Prospects Remain Strong

Ticker: $EVCM | Current Price: $11.24 | Price Target: $19 (+69%)

💻 Service Economy SaaS | 🏦 Payment Acceptance | 📞 Client Engagement | ✏️ Blog Post | 📈 Long Idea

The author recommends going long on EverCommerce stock at $6.60 due to solid 1Q performance and growth in payments revenue. EverCommerce's management is taking steps to streamline offerings and reduce go-to-market friction, leading to long-term growth potential. Growth is expected to accelerate as the macro environment improves, with evidence of cross-sell opportunity from a 37% increase in payments revenue from customers who use multiple solutions. The company has a large potential customer base for payment revenues, with a gross margin of 95% and high incremental margin. The author anticipates significant growth in payment revenue, with a 37% YoY growth in 1Q23. Risks include the dynamic nature of the software solutions industry and low start-up costs for competitors. Overall, the author is confident in EVCM's long-term growth prospects and believes the company's performance has exceeded expectations so far.

Which of the featured trades is most compelling?

Login or Subscribe to participate in polls.

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ - Microsoft ($MSFT) [50%]

🟨🟨⬜️⬜️⬜️ - Paypal ($PYPL) [40%]

🟥⬜️⬜️⬜️⬜️ - Amazon ($AMZN) [10%]

Your two cents:

  • 🤖 jd****: (MSFT) is best positioned to take advantage of the AI trends

  • 💸 r9**** - (PYPL) is massively undervalued compared to its competitors

🐻 Bearish v 🐂 Bullish

Company: DraftKings ($DKNG)

Bullish Reasons:

  1. Strong Market Position: DraftKings is a leading digital sports entertainment and gaming company. It provides online sports betting, online casino, daily fantasy sports product offerings, and other consumer product offerings, positioning it well to capitalize on the growing online gaming market

  2. Revenue Growth: DraftKings has demonstrated strong revenue growth. Its one-year annual revenue growth rate is approximately 72.87%, and its three-year and five-year annual revenue growth rates are approximately 91.26%

  3. Expanding Market: The legalization and regulation of online sports betting and gaming is expanding across the United States, providing DraftKings with a growing market.

Bearish Reasons:

  1. Regulatory Risks: The company operates in a heavily regulated industry, and any changes in regulations could negatively impact the business.

  2. Competition: The online betting and gaming industry is highly competitive, and DraftKings faces competition from both traditional and online players.

  3. Negative EBITDA: The company's EBITDA for the trailing twelve months is approximately -$1.20 billion, indicating negative earnings before interest, taxes, depreciation, and amortization

Are you bearish or bullish on DraftKings?

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Yesterday’s Results for Microsoft ($MSFT):

🟩🟩🟩🟩⬜️ 🐂 Bullish (85%)

🟥⬜️⬜️⬜️⬜️ 🐻 Bearish (15%)

Your two cents:

  • 🤖 mk***: It is the biggest player in AI through its investments in Open AI and Azure being a top cloud provider for AI companies.

💰📈 Winning Trade from a Previous Email

Unity Software ($U): Down Now, Much Stronger Later (link)

Ticker: $U

Date Published: 2023-04-19

Return: +27% ($29.52 → $37.56)

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