YB new stock pitches (Fri, Apr 4)

CACI International Inc. (CACI) is a leading provider of technology services for national security, with 74% of revenue from the Department of Defense. The company demonstrated strong growth in Q1 FY 2025 with 11.2% revenue growth and a 10.5% EBITDA margin. CACI's $32.4B backlog, representing 4.1x trailing 12-month revenues and growing 21% year-over-year, underscores its essential services. Management targets high single-digit revenue growth and mid-11% EBITDA margins through FY 2027. The stock was oversold following the Department of Government Efficiency (DOGE) announcement, but CACI's critical technology services are unlikely to be significantly impacted. The company has a strong track record of value-accretive acquisitions and share repurchases, reducing shares outstanding by 28% since 2007. With a 2.8x leverage and $334MM remaining in share repurchase authorization, CACI maintains a strong balance sheet. The main risk is potential DOGE recommendations for revised contract structures, but this concern appears overblown given CACI's critical services and ability to adapt to different contract structures.

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Neogen Corporation (NEOG), a global leader in food and animal safety, presents a compelling investment opportunity despite recent underperformance due to integration challenges following its merger with 3M's Food Safety business. The company is poised for a substantial re-rating driven by organic growth acceleration, synergy realization, and operational improvements. Key catalysts include the completion of internal Petri-Film capabilities by August 2026 and margin expansion as production ramps up. NEOG currently trades at 17x EV/EBITDA, significantly below its historical average of 25x. With potential EBITDA of $230M in 18-24 months, applying a 25x multiple yields a price target above $20. Risks include integration execution, margin pressure, and technical selling overhang, though recent insider buying signals confidence. The company faces headwinds from FX, freight costs, and genomics business challenges, but benefits from regulatory tailwinds and a strong competitive moat in food diagnostics. Management aims for mid-single to high-single-digit core growth and 30% adjusted EBITDA margins, potentially leading to a 2-3x return in 18-24 months if execution improves.

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The Westaim Corporation (WED.V) is an integrated insurance and asset management platform trading at 1.1x tangible book value, offering an attractive investment opportunity. The company's key assets include Arena Investors, a private credit fund with $4.2B AUM, potentially worth $500M-$1B by 2028 despite being valued at only $23M on the balance sheet. Westaim plans to launch Ceres Life, a de novo annuities business targeting 15-20% ROE. Management has a proven track record with a 15.8% IRR since 2009. The company has announced a $100M share buyback and has the potential to achieve 17%+ ROE. With $600M to capitalize Ceres Life and invest through Arena, Westaim is positioned for significant growth. Key risks include execution challenges in scaling Ceres Life, potential higher costs, and Arena's performance. Catalysts include the share buyback, the upcoming 2025 Annual General Meeting, and potential uplisting to a major exchange. Overall, Westaim presents an asymmetric opportunity with limited downside and significant upside potential.

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