YB new stock pitches (Fri, Feb 21)

Delek US Holdings (DK), a refinery company, has seen its stock price nearly halve since April due to weak diesel demand and tighter refining margins. However, a potential recovery in trucking by 2025 could boost refiners. Management is unlocking value through a $400 million share repurchase program funded by the sale of 249 gas stations and convenience stores. The sum-of-parts valuation suggests DK is worth $31 per share, compared to the current $17 price. The CEO has been buying shares personally, indicating confidence in the company's value. Historically, when West Texas Intermediate (WTI) oil prices turn negative year-over-year, refiners have outperformed the energy sector 75% of the time by an average of 25%. Insider buying at DK and other refiners, along with investments from Carlos Slim and Carl Icahn in the sector, are encouraging signs. The company's max downside price target is $16, close to the current $17 stock price.

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Tavia Acquisition Corp. (TAVI) is a new SPAC led by Kenes Rakishev, a controversial Central Asian oligarch with a history of failed businesses and fraud accusations. The team behind TAVI previously launched Oxus Acquisition Corp., which merged with Borealis Foods, a struggling company producing a modern version of Cup-o-Noodles. Borealis Foods has poor financials, including $28 million LTM revenue, 17% gross margins, and $15 million cash burn in 9 months. The stock is expected to eventually trade to zero but is difficult to short due to low trading volume and high borrowing fees. TAVI, trading at $1 million per day, is suggested as a potential short opportunity based on the team's track record of involvement with multiple failed companies and their connections to sketchy businesses and individuals. The author advises caution and suggests shorting anything associated with this group.

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El Al Israel Airlines Ltd. (ELAL.TA) is Israel's national carrier with a 46% market share. The company's Q4 FCF margin reached 23%, expected to normalize to 16%. El Al plans to modernize its fleet to 58 aircraft by 2031, increasing capacity by 40% to 8.8 million passengers. The stock trades at 4.0x 2025E P/FCF and 2.6x EV/EBITDAR, compared to peer averages of 9.7x and 6.0x respectively. A DCF analysis yields a target price of $12.02, representing a 283% upside from the current price of $2.98. The company benefits from strong global air travel tailwinds, limited aircraft supply, and high insider ownership. Key risks include capital distribution limitations due to COVID-era agreements and potential competition return. El Al is negotiating with the state to reduce these restrictions, which could serve as a catalyst for the stock. The company's fleet modernization and expansion plans, along with its strong market position and recovering local air travel, position it for potential growth.

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