YB new stock pitches (Thu, Oct 24)

Cellebrite DI Ltd. (CLBT) offers critical digital forensics software for law enforcement, with its core product UFED (80% of revenue) having near 100% adoption. The company boasts a 125%+ net retention rate and low churn, with cross-selling opportunities for Pathfinder and Guardian products. Cellebrite's software is essential for managing complex digital evidence, creating high barriers to entry. The company is experiencing 20-30% growth with expanding margins and has $350 million in net cash. Management, led by CEO Yossi Carmil, has a strong track record of execution and strategic growth. Future growth prospects include expanding module usage per customer, entering new markets like private enterprises, and leveraging AI-powered analytics across various sectors. While the current valuation is stretched compared to earlier in the year, it remains reasonable at 21x FY2026 EV/EBITDA, with expectations of reaching $160 million in EBITDA by FY 2026. Risks include the company's SPAC IPO background and overreliance on government clients.

Read the full article here. Read time: 6 min

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

DGL Group Limited (DGL.AX) is an Australian specialty chemicals distributor trading at 5x EV/EBITDA. The company operates in a fragmented market with strong tailwinds including outsourcing, consolidation, and increasing regulation. DGL's asset-heavy model, comprising chemical manufacturing, logistics, and environmental services, differentiates it from asset-light competitors. The company has experienced a significant share price decline due to market normalization after COVID-induced growth, higher debt levels, and lower liquidity. Despite current market softness, DGL's FY24 results show resilience. Management expects >20% annual EBITDA growth long-term through organic growth and acquisitions. Risks include macroeconomic uncertainty and CEO-related issues. The current low valuation ignores long-term growth potential, with a possible 40% annual return over five years if DGL reaches a 7.5x multiple on projected $130m EBITDA. The investment thesis relies on a long-term view of 5+ years for potential realization.

Read the full article here. Read time: 9 min

GDS Holdings Limited (GDS) is a pan-Asian data center operator with 2.5 gigawatts of power capacity across China and other Asian markets. The company has recently been reinvested in due to strong secular tailwinds, including cloud adoption, data growth, and increasing AI demand. GDS leases data center space to major tech companies under long-term contracts. The company's valuation is estimated at $45-$55 per share in 2-3 years, compared to the current price of $20. GDS International (GDSI) is projected to grow cash flow from $50 million to $500 million in 3 years, with potential to reach $1 billion. GDS Holdings (GDSH) is expected to increase cash flow from $700 million to $1 billion in 3 years. Key catalysts include a potential REIT structure for stabilized assets. GDSI is valued at $15 per share near-term and $25 in 4-5 years, while GDSH is valued at $30-$40 per share near-term.

Read the full article here. Read time: 2 min