YB new stock pitches (Thu, Feb 6)

Innovative Food Holdings (IVFH), a nationwide specialty food distributor with a $95M market cap, is undergoing a turnaround led by new CEO Bill Bennett. The company's core competencies include nationwide distribution and vendor sourcing. Bennett's three-phase plan focuses on stabilizing the business, building a foundation for growth, and scaling. IVFH recently raised $3.25M for a major cheese contract and completed two tuck-in acquisitions (Golden Organics and LoCo) to expand product offerings and revenue. The company aims to reach $100M in revenue and $6-7M in FCF by 2025, leveraging its asset-light model and debt-free status post-warehouse sale. With over 50% insider ownership, IVFH benefits from an experienced board and management team. The company's growth strategy includes expanding its drop-shipping business, cross-selling opportunities, and further tuck-in acquisitions at 3-5x FCF multiples. Potential catalysts include the sale-leaseback of their Pennsylvania warehouse, valued at $15-18M, which will make IVFH debt-free and provide excess cash.

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I use Interactive Brokers link to trade international and OTC stocks (if you can’t trade them in your current brokerage)

F.I.L.A. (FILA.MI), an Italian art and school supplies company with iconic brands like Dixon Ticonderoga and Canson, is significantly undervalued. Trading at €9.50/share, its stake in recently IPO'd Indian subsidiary DOMS is worth €9/share alone, valuing the core business at just 3.2x P/EBITDA and 5-6x estimated 2025 FCF. FILA has grown sales and EBITDA over 200% since its 2015 IPO, with North America accounting for over 50% of sales and 60% of EBITDA. The company aims to be debt-free by 2027 and has increased its dividend payout target to 20-40% of adjusted earnings. Key catalysts include improved 2025 financials and DOMS' growth. The stock's undervaluation is attributed to low interest in the Italian exchange, DOMS deconsolidation impacting reported financials, and lack of shareholder overlap between FILA and DOMS. With over 100% upside potential, FILA represents a high-quality business with strong brands at an attractive valuation.

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I use Interactive Brokers link to trade international and OTC stocks (if you can’t trade them in your current brokerage)

Canare Electric Co., Ltd. (5819.T) is a niche audio/video equipment manufacturer with stable financials, trading as a net-net stock at 0.6x price-to-book ratio and 10x price-to-earnings ratio. The company offers a 50% upside potential to its net current asset value (NCAV), with a negative enterprise value due to 77% of current assets being in cash and receivables. Canare Electric pays a 4.1% dividend yield with a 37% payout ratio. The company is experiencing strong overseas growth, benefiting from a weak yen, although this also poses a risk due to increased copper prices, its main raw material. With a stable client base and limited competition, Canare Electric has maintained consistent sales and profits. The company targets an EPS of 200 yen and a 40% dividend payout ratio. Investors are awaiting potential catalysts such as dividend hikes, share buybacks, management buyouts, or tender offers while collecting the current 4% yield.

Read the full article here. Read time: 3 min