YB new stock pitches (Mon, Mar 24)

Signet Jewelers (SIG), the world's largest diamond jewelry retailer, trades at 3.8x EBITDA and a 17% FCF yield. Q4 revenue fell 6% YoY to $2.35B, with same-store sales down 1.1%. FY26 guidance projects -2.5% to +1.5% comps. The company is focusing on bridal and fashion jewelry, restructuring for $100M in annual savings, and closing 150 underperforming stores. Lab-grown diamonds present both opportunities and risks, potentially impacting warranty revenue. Signet repurchased $1B in shares, reducing diluted share count by 20%, with $723M remaining in buyback authorization. Key risks include declining marriage rates and the impact of lab-grown diamonds on warranties. Upside potential includes multiple expansion, aggressive buybacks, and modest growth, potentially leading to a 15% IRR. Select Equity Group's 9.7% stake and push for strategic alternatives, including a potential sale, adds a possible catalyst. Management's execution and capital allocation decisions are crucial for realizing the stock's potential value.

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Encore Capital Group (ECPG), a leading U.S. debt collector, expanded to Europe by acquiring Cabot in 2019 but has faced headwinds in that market, leading to scaled-back operations and cost-cutting measures. The U.S. environment is more favorable, with rising credit card balances and delinquencies. ECPG's global funding structure allows for capital reallocation, resulting in record U.S. portfolio purchases for two consecutive years. The company incurred one-off non-cash charges due to changes in expected future recoveries and market exits in Italy and Spain. ECPG trades at 6.6x LTM P/E compared to PRAA's 10.9x. The outlook is positive, with elevated U.S. supply, extended maturities, lower leverage ratios, and a reinstated buyback program. The company has cleared the preliminary assessment, with Cabot issues resolved and a more favorable operating environment in the U.S.

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WM Technology, Inc. (MAPS) is an online marketplace for cannabis, operating as a picks and shovel play with $180M in revenue, 95% gross margins, 17% EBITDA margins, and positive free cash flow. The company has $45M in cash, no debt, and has become the dominant platform in the industry, benefiting from strong network effects. Trading at 1x revenue and 6x EBITDA, MAPS currently lacks sell-side analyst coverage and investor attention. The co-founders have bid $1.7 per share to acquire the company, compared to the current stock price of $1.3. An activist investor has urged the Board to reject this lowball offer, characterizing it as an attempt to steal the company from shareholders. Instead, the activist proposes pursuing a novel capital allocation strategy to improve the balance sheet and attract market attention.

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