YB new stock pitches (Tue, Feb 4)

AMMO Inc. (POWW) is divesting its ammunition manufacturing segment to focus on GunBroker.com, the largest online firearms marketplace in the US. Trading at 4.3x F26 EV/EBITDA, POWW is significantly undervalued compared to peers at 8x, offering a 50% upside with a $2.59 price target. The RemainCo boasts high margins (86% gross, 43% EBITDA) and minimal capex requirements. The $75M cash from the divestiture mitigates litigation risk from an ongoing lawsuit with GunBroker's former CEO. A cross-sell opportunity to increase take rates is currently ignored by the market. Risks include material reporting weaknesses that could lead to NASDAQ delisting and potential misallocation of divestment proceeds. Despite these concerns, the company's strong market position, high margins, and potential for increased take rates through cross-selling make it an attractive investment opportunity.

Read the full article here. Read time: 3 min

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

Repsol, S.A. (REP.MC) appears undervalued at 0.51x P/B and 4.9x CY2025 P/E, offering an 8.9% dividend yield and a -2.9% 5-year share count CAGR. The company has diversified profits across upstream ($2.9B), industrial ($2.7B), and customer ($800M) segments. Key risks include a $5.5B lawsuit from Peru and European energy concerns. Potential catalysts are the expiry of the Spanish windfall tax and the end of tax-loss selling. Management's plan assumes $70 Brent, $3.5 HH, and $6/bbl refining margins. Repsol has invested more in growth capex than peers when adjusted for valuation. The stock faces skepticism due to its European energy status and perceived management issues, but these concerns may be overblown given the current valuation. The company's diversified profit streams and conservative pricing assumptions in its capital plan suggest potential upside, although the ongoing legal risk with Peru remains a significant factor.

Read the full article here. Read time: 2 min

AMREP Corporation (AXR) is a land bank owning 17,000 acres in Rio Rancho, New Mexico, with a newly developed homebuilding segment. The company's gross profit per acre has increased from $50k-$75k pre-COVID to $300k-$500k currently, driven by inflation and local market dynamics. AXR trades at <10x EV/FCF, half the valuation of peers like JOE and HHH. The internal homebuilder improves land monetization, potentially increasing gross profit to $500k/acre. Management, including 18% owner James Dahl and 10% owner Bob Robotti, has demonstrated strong capital allocation through divestitures, share repurchases, and strategic local deals. The company has a $40M net cash position. Risks include local economic dependence, climate change impacts on water availability, and key person risk. Catalysts include sustained high profitability, homebuilder growth, and potential capital return programs. The stock has a price target of $75-$100 by April 30, 2028, implying a 30-40% IRR.

Read the full article here. Read time: 11 min