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Top trade ideas (Wed, Nov 22)
Connor Van Ooyen
November 22, 2023
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👋 Good Morning!
I typically don’t send emails on days the market is closed, but I will probably take both tomorrow and Friday off to enjoy the holiday!
Our AI read and summarized 87 stock ideas, 1031 news articles, and 101 insider trades and found:
An analyst report with 30% upside in one year (featured stock idea)
Sam Altman is back as CEO of Open AI (news)
The Executive Chairman at Charter Communications ($CHTR) sold 93% of his holdings (insider trade)
and much more…
Thanks for reading! Have a great holiday weekend!
Connor
* If you missed yesterday’s email, don’t forget to read it here
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FEATURED STOCK IDEA
ANALYST REPORT
NXP Semiconductors: Asian softness, ongoing strength in automotive
NXP Semiconductors N.V. provides a wide range of semiconductor products. The company's portfolio includes microcontrollers; application and communication processors; wireless connectivity solutions, such as near-field communications, ultra-wideband, Bluetooth low-energy, ZigBee, and Wi-Fi and Wi-Fi/Bluetooth integrated SoCs; analog and interface devices; radio frequency power amplifiers; security controllers; and semiconductor-based environmental and inertial sensors.
Ticker: NXPI | Price: $200.44 | Price Target: $260 (+30%) | Timeframe: 1 year
⚡️ Semiconductor | 💰 2% Dividend | 📈 Bullish Idea
In his analysis, Jim Kelleher, CFA, maintains a BUY rating for NXP Semiconductors N.V. (NYSE: NXPI), with a 12-month target price of $260. Despite a global economic slowdown, NXP surpassed 3Q23 sales and profit forecasts, driven largely by its robust automotive business, which grew in mid-single digits. Automotive gains are attributed to increased electronic content in EVs and hybrids, somewhat offset by high vehicle prices and financing costs. NXPI's Industrial & IoT sectors showed a decline, and Asian sales decreased due to COVID-related slowdowns in China. However, the company managed inventory and expenses effectively to maintain margins. Year-to-date, NXPI shares have underperformed compared to peers but showed resilience in the automotive sector. Financially, NXP reported 3Q23 revenue of $3.43 billion, stable year-over-year, with non-GAAP earnings of $3.70 per share. The company maintains a solid balance sheet, with active share repurchase programs and a growing dividend, currently at $1.014 per share. CEO Kurt Sievers anticipates inventory balance by 2024, positioning NXP favorably for future growth. The company's strategy focuses on market leadership across major sectors like automotive and IoT, supported by strong cash flow and a robust capital return policy. Despite some macroeconomic challenges, NXP's diverse market presence, particularly in automotive and communications infrastructure, and strategic financial management, underscore its solid investment potential.
Read the full article here (paywall). Read time: 11 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
Citigroup ($C)
🟩🟩⬜️⬜️⬜️ - Buy (38%)
🟥🟥🟥⬜️⬜️ - Pass (33%)
🟨🟨⬜️⬜️⬜️ - Watchlist (29%)
emoj**** (watchlist) - It’s still underperforming way below its peers. Would need to watch to see how fast the minor changes affect (if at all) its bottom line of performance.
* There are more stock ideas later in the email!
MARKET OVERVIEW
Are you short-term bullish or bearish? |
Yesterday: 50% bullish
The first all-red day in a while for the indexes. The small-caps continue to take most of the beating with the Russell down 1.32%. Yellowbrick Road readers are perfectly split on being bullish v bearish (down 1 point since yesterday) while the Fear v Greed index is actually up another 2 points. As you’ll see in the news section, the stock market news was quite a bit more bearish than the week's average as well. The comments from YBR readers still mostly point to how the market tends to perform well in Q4 and the holidays.
STOCK MARKET NEWS
Sam Altman is back as CEO of Open AI with a new Board - Twitter
Home sales slumped to 13-year low — 5th straight monthly decline — as prices soar - New York Post
Fed gave no indication of possible rate cuts at last meeting, minutes show - CNBC
Ford to scale back plans for $3.5 billion Michigan battery plant as EV demand disappoints, labor costs rise - CNBC
Uber Technologies to raise $1.2B in convertible debt offering - Proactive Investors
Nvidia’s revenue triples as AI chip boom continues - CNBC
* If you want all of the day’s most important stock market news, sign up for my free, daily email called Market Mornings.
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
This company went public on NASDAQ on Dec. 9, 1999 and saw its first-day gain reach a record 697.5 percent. Which company was it? |
Yesterday’s Question (link): Since 2000, what was the first company to become worth $1 Trillion?
Answer: PretoChina! This was a tricky one (most people chose Apple), but PetroChina actually hit $1.2T in 2007 when they announced that they found China's largest oil find in a decade. This was a full 11 years before Apple (who was second).
INSIDER TRADES
The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones.
The Executive Chairman at Charter Communications ($CHTR) sold 93% of his shares ($98.5M) (link)
The CEO at Monachil Credit Income Fund ($MONIX) increased bought $11M worth of the stock (link)
The interim CEO at Groupon increased his holdings by 5% ($3M) (link)
A director at NCR Voyix ($VYX) increased their holdings by 683% ($995k) (link)
The Executive Chairman at SR Bancorp ($SRBK) bought the stock for the first time ($584k) (link)
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
The last time low dividend stocks outperformed high dividend stocks by this margin was in 2000
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SECRET QUESTION
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If you read this far, reply to this email with your answer to gain points for the weekly tournament. (Or if you’d rather not answer but still want the points, you can just reply and say hi!)
Secret Question: What are your Thanksgiving plans? I will be having Thanksgiving #2 with my wife’s family tomorrow.
BONUS STOCK IDEAS
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BLOG POST
Rightmove: Reassessing after CoStar Entry & Lindsell Train SpeculationRightmove: Reassessing after CoStar Entry & Lindsell Train Speculation
Rightmove plc, together with its subsidiaries, operates property portals in the United Kingdom and internationally.
Ticker: RMV.L | Price: GBp 497.40 | Price Target: GBp 827.90 (+66%) | Timeframe: end of 2026
🏠 Real Estate | 💰 1.9% Dividend | 📈 Bullish Idea
Rightmove, a dominant U.K. online real estate portal, is facing new competition with CoStar's entry into the market through its acquisition of OnTheMarket. Despite Rightmove's share price dropping 17.7% to one of its lowest levels in five years, investment firm Lindsell Train has reportedly started buying shares, indicating confidence in the company. Rightmove is trading at 19.3x its 2022 EPS with a 1.9% dividend yield, and projections suggest over a 60% total return by the end of 2026. Rightmove's strong "network effect" and free service to consumers are expected to maintain its market dominance. CoStar, significantly larger in size, plans aggressive marketing to establish OnTheMarket as the top player. However, Rightmove's extensive property listings and brand strength are likely to keep it as the primary choice for estate agents and consumers. Adjustments in pricing and increased investment may slow Rightmove's earnings growth in the medium term, but its diverse product offerings and strategic pricing tiers position it well against low-end competition. Despite the challenges, Rightmove's current valuation and market position warrant a Buy rating.
Read the full article here. Read time: 11 min
HEDGE FUND
Horos Asset Management re-established position in Onex
Onex Corporation is a private equity firm specializing in acquisitions and platform acquisitions. The firm makes investments in buyouts, large- middle market, large-cap, mid-cap, and small-cap market and distressed companies.
Ticker: OTC: ONEXF | Price: $64.57 | Price Target: N/A | Timeframe: N/A
🏦 Banking | 🇨🇦 Canada | 📈 Bullish Idea
Onex, a Canadian asset management company, stands out for its transition from making direct private equity investments using its balance sheet to managing third-party assets in private equity and credit segments, now accounting for nearly $50 billion in assets under management. The investment interest in Onex centers on two key aspects. Firstly, the recent retirement of its founder and 40-year CEO, Gerry Schwartz, has ushered in Bobby Le Blanc as the new leader, who is implementing cost-cutting measures to stabilize the private equity fund management business and plans to significantly grow the credit segment. Secondly, Schwartz's retirement could lead to a loss of his voting control, potentially making Onex attractive for acquisition. However, the primary investment appeal lies in Onex's current trading at a substantial discount, 40% below intrinsic value at the time of our purchase during this quarter, against its investments in its own funds and direct investments in companies, real estate, and other assets. This undervaluation is being actively addressed by Onex through aggressive share buybacks, having repurchased over 20% of shares since 2020, thereby creating significant value for its shareholders.
Read the full article here. Read time: 15 min
HEDGE FUND
MCJ Capital holding update: Redishred
RediShred Capital Corp., together with its subsidiaries, operates the Proshred franchise and license business in the United States. The company operates through three segments: Franchising and licensing, Corporate Locations, and Corporate.
Ticker: KUT.V | Price: CAD 2.81 | Price Target: N/A | Timeframe: N/A
📃 Document Shredding | 💼 Franchising | 📈 Bullish Idea
Redishred Capital Corp (KUT.V) is navigating a challenging market, with its share price affected by the significant drop in recycled sorted office paper prices, down over 50% from last year. This decline impacts Redishred's business model, which profits from high paper prices through its recycling operations. However, the company mitigates these fluctuations through its core shredding services and a unique acquisition strategy. During low paper price cycles, Redishred capitalizes on depressed valuations to consolidate route territories, counterbalancing the cyclical nature of recycled paper prices. This year, Redishred has already expanded in New Jersey and Baltimore, with more acquisitions anticipated. Additionally, the company has announced a share repurchase plan for up to 10% of total company shares, although its trading on the TSX Venture Exchange limits buybacks to 25% of the average daily trading volume. Currently trading below its potential takeout value, Redishred presents a long-term investment opportunity, more attractive than a one-time profit from a potential private equity acquisition.
Read the full article here. Read time: 4 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Fidelity National Information Service ($FIS) [40%]
🟨🟨⬜️⬜️⬜️ EXL Services ($EXLS) [31%]
🟥⬜️⬜️⬜️⬜️ Duratec ($DUR.AX) [29%]
WEEKLY TOURNAMENT
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🏆 This Week’s Leaderboard
stock**** (94 points)
shaw*** (94 points)
cgar_**** (94 points)
Scoring
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THAT’S ALL FOLKS
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Connor (@connorvo on Twitter)
How would you rate today's newsletter?If you vote 1 or 3 stars, please leave a comment with what you didn't like so I can improve it! |
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