YB new stock pitches (Fri, Mon 21)

Euronet Worldwide (EEFT), a legacy company transformed into an omnichannel remittance provider, has achieved a 30-year CAGR of 15% in revenue, operating income, and EPS. In 2024, the company reported YoY growth of 9% in revenue, 14% in operating income, and 15% in EPS. The Money Transfer segment, including Ria, now accounts for 42% of total revenue. EEFT has invested in digital infrastructure through Ren and Dandelion, integrating its EFT, Money Transfer, and ePay segments into a global payments network. The company trades at a forward P/E of 10.1x, offers a 13.9% FCF yield, and has a consensus 5-year EPS growth estimate of 15%. Management guides for 12-16% EPS growth in 2025. Insiders own approximately 10% of shares, with CEO Michael Brown holding 5.7%. The main risk is competition from digital players like Wise and Remitly. The author owns EEFT shares and is adding more around $100.

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Alta Equipment Group (ALTG), a construction equipment and forklift dealership rollup, trades at a $174M market cap, matching the lower end of its 2025 EBITDA guidance of $175-190M. The founder-led company, with 17% insider ownership, has made 16 acquisitions since its 2020 IPO at 4-5x EBITDA. ALTG benefits from a monopolistic dealership system, recession-resistant parts/service revenue, and potential reshoring tailwinds. Despite a 2024 trough year due to interest rates and manufacturing slowdown, management expects growth in 2025, with Q4 2024 showing increased activity. The company's debt, refinanced at 9% coupon until 2029, is a priority for paydown. With a stable 8.0x EV/EBITDA valuation historically, price targets are set at $10.97 for 2025 and $14.51 for 2026, based on moderate scenarios and $25M projected free cash flow for 2025. Potential catalysts include Trump's policies, falling interest rates, and a manufacturing rebound, while risks involve high leverage and interest rate sensitivity.

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Velan Inc. (VLN.TO), a valve manufacturer with a market cap of ~$300M, has sold its French division for $201.1M and is divesting its asbestos liabilities for $143M. The remaining business, valued at a low pro-forma multiple, has a strong position in refining, LNG, and nuclear industries, with 2023 being its best year since 2022. The company has $66.6M in pro-forma net cash, 30%+ margins, and an executable backlog of $298.7M as of November 2024. The family, owning 72% of shares, likely wants a full sale of the remaining business, which could be worth more to a strategic buyer. Velan previously received an offer from Flowserve for C$13 per share in 2023, which failed due to French government intervention. The company has undergone restructuring, improved its operations, and is now positioned for potential acquisition, with a shareholder vote scheduled for March 20th to approve the French division sale.

Read the full article here. Read time: 32 min