YB new stock pitches (Mon, Feb 24)

ThredUp (TDUP), the leading US second-hand clothing marketplace, presents a compelling investment opportunity with a potential 700% upside to a $19 5-year price target. The company recently beat Q4 expectations with 9% revenue growth and 6.5% adjusted EBITDA margins, showing strong momentum into 2025. ThredUp has resolved previous challenges, including a European business divestiture and marketing issues. Over the next five years, management expects high-teens revenue growth and 25-30% incremental adjusted EBITDA margins, projecting $100 million in free cash flow by 2030. The company's unique full-service model, handling logistics, processing, and marketing, creates a strong competitive moat in the rapidly expanding second-hand market. Despite its potential, ThredUp currently trades at an attractive valuation due to past cash burn and a 2024 stumble. With a market cap of ~$250 million and a current share price of ~$2.26, ThredUp offers significant growth potential as it transitions from cash burn to free cash flow generation.

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Redox Limited (RDX.AX) could captivate those seeking quality secular compounders at attractive valuations; the stock experienced an irrational 21% drop post-results. The business is realigning, facing moderate pressures on margins due to shifts in commodity mixes and prices. Foregoing gross margin expansion, Redox's narrative is rooted in consistent market growth and potential M&A activity, managed with historical fiscal prudence. Looking ahead, low double-digit EBITDA growth is anticipated, potentially 15-20% annually with strategic acquisitions. A leading name in its sector, Redox now trades at less than 13 times EV/EBITDA.

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Interactive Brokers Group, Inc. (IBKR), a low-cost brokerage operating in over 200 countries, experienced a 26.9% share price increase in Q4, driven by strong fundamentals including 30% account growth and 33% client asset growth. The company benefited from international investors seeking access to outperforming U.S. markets, as well as the broader rally in financial stocks following the Republican elections sweep. IBKR's outlook remains positive, with expectations of increased capital markets activity, a more favorable regulatory environment, and potential for higher market volatility supporting future growth prospects. The company's performance reflects its strong position as a low-cost broker catering to a global clientele.

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