YB new stock pitches (Mon, Jan 20)

Weatherford International (WFRD), a $5.2 billion market cap global oil field services provider, presents a compelling investment opportunity with a $114 price target, offering 59.2% upside. Since its 2019 restructuring, WFRD has significantly improved its financials, boasting a low 0.53x net debt/EBITDA ratio and projecting $500 million in free cash flow for 2024 (9.7% yield). The company benefits from a globally diversified revenue base, with strong exposure to high-margin segments like offshore drilling and digital sub-surface evaluation. WFRD's adjusted EBITDA margins, rivaling industry leader Schlumberger at 25%, have potential to reach the high 20s. Despite these strengths, WFRD trades at a mere 4.44x 2024 EV/EBITDA, significantly below its peers' 6-9x range. The company's undervaluation, coupled with its strong financial position, margin expansion potential, and global market presence, makes it an attractive investment and a potential M&A target for larger competitors like Baker Hughes or Halliburton.

Read the full article here. Read time: 3 min

Bridgford Foods Corporation (BRID) is an undervalued specialty food company with a strong balance sheet, including a 4.27 current ratio and $15.9M in cash versus $2.1M in debt. The company's real estate could be worth up to $200M, significantly higher than its $65.3M book value. BRID trades at attractive valuations with a P/S of 0.35 and P/B of 0.65. Management is conservative and family-focused, but the company faced a Q3 loss due to margin squeeze and sales drop. Insiders have been buying shares with no sales in the past year. The company recently leased its Anaheim processing plant parking lot for $3.9M over five years. Risks include ongoing profitability struggles and potential issues with major customers like Dollar General and Walmart. BRID is exploring cost-cutting measures, entering private label business, and expanding into food service and convenience store sectors to improve future results.

Read the full article here. Read time: 5 min

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Merchant House International Limited (MHI.AX), a textile manufacturer, is undergoing liquidation with a market cap of $14.13M. The company's last remaining asset, a textile plant in Bristol, VA, is expected to be sold within 12 months. The CEO owns 65% of the company, incentivizing a quick and profitable liquidation. Three potential scenarios are presented: bear (50% of book value), base, and bull cases, all of which could be profitable. The company has a history of selling assets above book value, including recent sales of FIT division and Jiahua interest. Risks include a prolonged sale process, inability to find a buyer, piecemeal equipment sales, management changing plans, or excessive salaries depleting value. The investment is considered uncorrelated to the overall market. Despite these risks, the large discount to fair market value and the company's track record of selling assets above book value make it an attractive opportunity.

Read the full article here. Read time: 4 min