YB new stock pitches (Tue, Nov 5)

Xometry (XMTR) operates an online marketplace connecting 60,000 buyers with 3,500 suppliers for custom-manufactured parts, offering quick sourcing and pricing comparisons. The company's AI-driven pricing has improved margins by 10% since its IPO, with potential for further growth. Serving a $200 billion market, Xometry counts NASA, SpaceX, and the US Army among its customers. Despite a weak manufacturing environment and an 80% stock drop from its peak, Xometry has doubled its marketplace sales since 2021, outperforming peers. The company is shifting focus to larger accounts and expects to be profitable within a year, projecting long-term revenue exceeding $1 billion with double-digit EBITDA margins. Using comparable specialty distributor or digital marketplace multiples, Xometry's stock shows potential for over 100% upside from its current price.

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Talen Energy Corporation (TLN) is an independent power producer with 10.7 GW capacity, including a 2.2 GW nuclear plant. The company benefits from the IRA's production tax credit, setting a $40/MWh floor for nuclear power versus $23/MWh costs. A PPA with Amazon at $70/MWh premium highlights data center demand potential. Talen targets 8x EV/EBITDA and 12x FCF by 2026, with upside from additional PPAs. The company has repurchased 14% of shares and authorized another 15% buyback. Trading at a significant discount to peers like Constellation Energy, Talen offers potential upside of 80% to replacement cost. The stock's valuation gap is recognized by management, who are aggressively buying back shares. Risks include the company's recent emergence from bankruptcy and potential overreliance on the Susquehanna nuclear plant, which generates nearly 50% of Talen's power despite representing only 20% of capacity.

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OCI N.V. (OCI.AS) is currently trading at €11 per share, compared to €13 per share in net cash post-special dividend of €14.75. The company has a negative enterprise value of -€842 million, backed by a 13% stake in MEOH, the only ammonia import terminal in the Port of Rotterdam, and a European nitrogen fertilizer business with an estimated replacement cost of €3.5 billion and midcycle earnings of €255 million. This values the company at -0.24x EV/replacement cost. Concerns include potential Dutch withholding tax on future distributions and uncertainty regarding a possible long-term M&A strategy. Despite these concerns, the current valuation implies that the remaining company is not only worthless but a liability, which seems extreme given its net cash position and hard asset backing.

Read the full article here. Read time: 1 min