YB new stock pitches (Fri, Dec 20)

The Children's Place, Inc. (PLCE) is projecting Q4 sales of $450-460M, with a gross margin of 30% compared to 21.7% last year. The company estimates $35-38M in EBITDA for Q4, contributing to a potential baseline of $125-130M for the year. CAPEX is expected to be $25M, with interest expenses decreasing. PLCE anticipates a path to free cash flow and debt reduction in 2024, with an estimated $3 per share in FCF post-rights offering. At a current share price of $10, the stock appears undervalued. Wholesale strength is offsetting retail weakness, with sales up 3.4% quarter-to-date. The company's SG&A expenses are expected to be around $100M, similar to Q3. Despite a calendar shift affecting Q2 and Q3 results, PLCE has achieved over $100M in EBITDA for the first nine months of the year, with an improved Q4 expected.

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Zedge (ZDGE), a mobile personalization company with $30M revenue in FY24 and 9.1% EBITDA margin, is trading at less than 3x EV/EBITDA. Despite the underperforming GuruShots acquisition, the company's legacy business continues to grow, with high gross margins exceeding 90%. Zedge's FTE base has nearly doubled since 2021, presenting cost-cutting potential. The company is expanding into the Creator Economy and anticipates significant improvements in Q2 after resolving temporary advertising growth challenges. With 74% of its market cap in net cash, a new $5M share buyback program (20% of market cap), and the potential to triple EBITDA through cost reductions, Zedge presents an attractive investment opportunity. However, risks include potential ad slowdown and failed diversification efforts. The CEO expects a return to growth, but the success of GuruShots remains uncertain.

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Airtasker Limited (ART.AX) is a profitable Australian marketplace for local services, with a $40m+ revenue and $12m+ EBITDA Australian business funding growth in the UK and US markets. The Australian operations are undervalued at 45-50c/share, while the UK and US businesses are ahead of Australia at the same stage of development. Media-for-equity deals worth $51m cap downside risk while providing growth potential. The company is founder-led with aligned incentives, as the CEO takes most of his salary in shares. Using a conservative 15x EV/EBITDA multiple for the Australian business and factoring in the implied valuations of the UK and US operations from media deals, a 57-62c/share valuation is derived. The stock offers potential upside from international growth, with the UK and US markets being multiples the size of Australia's. The mature Australian business is poised for renewed growth following years of restrained marketing.

Read the full article here. Read time: 14 min