🤖📈 Top Trade Ideas for June 29

Including an iBuying company that is going to $0, a cannabis company with over 300% upside, and much more...

Author

Connor Van Ooyen
June 29, 2023

👋 Hello!

Welcome to the 458 new Yellowbrick Road readers who joined since the last issue.

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Our AI read and summarized 184 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:

  • 🏠 An iBuying real estate company that is going to $0

  • 🐻 The bearish v bullish case for TWLO

  • 📱 [Premium] Morningstar analyst gives a cannabis company over 300% upside

  • 🤖📈🚗📱 Much more…

*If you missed yesterday’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!

🥇 Twilio: Driving Digital Customer Engagement On A Global Scale (link)

Ticker: $TWLO | Current Price: $63.81 | Price Target: $80 (+25%)

📱Communications | ☁️ Cloud | 🤖 AI | 📈 Long Idea

Twilio is expected to experience double-digit growth in the UC&C sector and avoid price wars in mature deals. The author has a price target of $80 on the stock. While Q1 results were slightly better than expected, there was a 2% decline in revenues quarter-over-quarter. Twilio believes that AI will drive the next major platform shift and considers its broad portfolio, particularly Segment, to be vital in providing customer data for AI-driven products. Twilio holds a prominent position in the CPaaS market and differentiates itself through innovation and a developer-centric approach. The shift towards cloud-based digital customer engagement channels, accelerated by the global pandemic, is expected to drive market growth in areas Twilio focuses on automating. Demand for UC&C solutions is expected to remain solid, and Twilio is expected to have high growth outlooks in 2023. The company has aggressively restructured to sustain top-line gains and drive operating-profit growth. However, the valuation of UC&C companies has been impacted by the economic slowdown and rising rates. Twilio faces risks related to changes in contracts with Variable Customer Accounts and potential impact from newer messaging capabilities. Overall, the author is optimistic about Twilio's long-term outlook and has a buy rating on the stock with an end-of-year price target of $80.

Click here to read the full article

🥈 Offerpad Solutions: Flawed Business Model, Insiders Selling Out Positions (link)

Ticker: $OPAD | Current Price: $12 | Price Target: $0 (-100%)

🏠 Real Estate | 💸 iBuying | 📉 Short Idea

The author of the article believes that Offerpad Solutions Inc (OPAD) holds no significant value and rates the stock as a strong sell. They present three core arguments to support their belief. Firstly, substantial shares are being sold by insiders, including Offerpad Co-founder Jerry Coleman and the sponsor, Supernova Partners LLC. Secondly, the use of a Special Purpose Acquisition Company (SPAC) for its transition into a publicly traded stock is a reason for caution. Lastly, the company's inability to achieve positive net income over the past 8 years and the exit of Zillow and Redfin from the iBuyers market highlight fundamental flaws in its business model. The author also highlights that OPAD insiders and Supernova Partners LLC have completely sold off their positions in the past six months. They also highlight the exit of Zillow and Redfin from the iBuyers market as evidence of the failure of the business model. The author predicts bankruptcy for OPAD by the end of the year, citing insiders liquidating their positions, the failure of the business model, and the company's lack of profitability over its history.

Click here to read the full article

🥉 Bel Fuse Inc is a Strong Buy (link)

Ticker: $BELFB | Current Price: $56.29 | Price Target: N/A

🏭 Manufacturing | 🏷️ Undervalued | 📈 Long Idea

Bel Fuse Inc. is a strong buy. With more than 70 years of experience in designing and manufacturing electrical components, the company has a strong history of launching and selling products across various sectors, such as networking, aerospace, telecommunications, and military. Despite being a small-cap company, it has shown significant growth and has consistently beaten top-and-bottom-line earnings for eight consecutive terms. Its Q1 EPS of $1.35 beat the market by $0.55, and revenues of $172.34M were up 26%, driving shareholder returns of over 155% over the last year. BELFB has also maintained paying a modest dividend. It's on an uptrend, with a YTD price performance of +61% and over the last year of +228%. Despite trading near its 52-week high, its valuation metrics are significantly discounted, with a forward P/E ratio of 12.06x compared to the sector's 24.83x, and a trailing PEG ratio at more than an 88% discount to the sector.

Click here to read the full article

Which featured trade idea was the most compelling?

Vote and leave a reason to have it featured in tomorrow's newsletter!

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Yesterday’s Poll Results (link):

🟩🟩🟩⬜️⬜️ - Enphase Energy ($ENPH) [53%]

🟨🟨⬜️⬜️⬜️ - Mercado Libre ($MELI) [35%]

🟥⬜️⬜️⬜️⬜️ - Dave and Busters ($PLAY) [12%]

Your thoughts:

  • ☀️ td*** ($ENPH): Will benefit from the continued shift to clean energy

  • 📦 br*** ($MELI): The Amazon of Latin America - multiple growth avenues in a largely untapped nascent market.

🤔 Stock Market Quiz

Which company's stock made Steve Jobs his first billion dollars?

Choose your answer to see how others voted

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Yesterday’s Question: In the dot-com crash of 2000, Microsoft stock fell over 50%. In what year did the stock fully recover (i.e. the market cap was higher than before the dot-com crash)?

Answer: 2016! (Only 22% got this answer correct. It took a LONG time for MSFT stock to fully recover)

🐻 Bearish v 🐂 Bullish

Company: Twilio ($TWLO)

Bullish Reasons:

  1. Business Reorganization: Twilio recently reorganized its business into two units: Twilio Data & Applications and Twilio Communications. This strategic realignment is expected to accelerate growth for Data & Applications and drive efficiencies for Communications, accounting for each business unit’s unique economic, customer, and product needs

  2. Customer Wins: Despite facing some challenges, Twilio has managed to secure key customer wins, including Cricket Wireless and Web Health, which became sizable Flex customers

  3. Revenue Growth: Twilio's revenue has been growing, with the total revenue for Q1 2023 being $1,006,564,000 compared to $875,363,000 for Q1 2022. This indicates a strong demand for Twilio's services

Bearish Reasons:

  1. Dependence on Usage-Based Fees: Twilio derives the majority of its revenue from usage-based fees, which could be impacted by changes in customer usage patterns

  2. Business Reorganization Risks: While the recent reorganization of Twilio's business into two units could potentially drive growth and efficiencies, it also introduces risks associated with the execution of this new strategy

  3. Lower Margins: Twilio’s margins are expected to be structurally lower than software peers because of network carrier access fees. Despite substantial scale, Twilio remains unprofitable on a GAAP basis and loosely breakeven on a non-GAAP basis.

Are you bearish or Bullish on TWLO?

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Yesterday’s Results for $MELI (link):

🟩🟩🟩⬜️⬜️ 🐻 Bearish (53%)

🟨🟨⬜️⬜️⬜️ 🐂 Bullish (47%)

How were today's trades?

Your feedback is super helpful!

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💰📈 Winning Trade from a Previous Email

Cloudflare: Poor Sales Execution Offsets Push to Profitability as Macro Tightness Persists (link)

Ticker: $NET

Date Published: 2023-05-02

Return: +55% ($42.88 → $66.51)

📈 Premium Trade Ideas

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