YB new stock pitches (Wed, Feb 12)

Xponential Fitness (XPOF), a franchisor of boutique fitness studios, trades at 8.5x 2025 EBITDA compared to peers at 17.5x. The company has a newly refreshed board and executive team, including high-profile professionals from Domino's Pizza, Microsoft, and Adidas. XPOF has high visibility into future unit growth, with a 62% unit growth backlog. The recent acquisition of a subscale competitor supports a higher valuation. The company has addressed issues raised in a short report by closing company-owned transition studios, divesting underperforming brands, and resolving regulatory investigations. XPOF expects to generate $80-90m in FCF for 2025, representing a 10% yield. Growth is anchored by strategic initiatives, including 1,980 sold franchise licenses yet to open and international expansion. Club Pilates, XPOF's crown jewel, is potentially worth the entire company's enterprise value based on recent comparable transactions. The stock could reach $60 in 3-4 years (versus $17.35 today), driven by unit growth, same-studio sales growth, and potential share buybacks. Risks include brand dependency, franchisee churn, and ongoing lawsuits.

Read the full article here. Read time: 9 min

Citizens Bancshares Corporation (CZBS), an Atlanta-based bank, received $95.7 million in ECIP capital in June 2022, resulting in a 36% year-over-year stock price increase and a $1 dividend payment. The company has reduced its share count by 10% over two years to 1.8 million shares. Earnings for the first nine months of 2024 were $4.55 per share, up from $4.23 in the same period of 2023, with both years impacted by a $3 million loan loss provision. CZBS is now one of the most overcapitalized banks in the US, with an annualized earnings run rate of approximately $7.50 per share after preferred stock expense. Trading at a P/E ratio of 7x, the stock is considered undervalued. Expectations include potential acquisitions, organic growth, and continued shareholder returns through dividends and share repurchases.

Read the full article here. Read time: 1 min

Vivid Seats, a leading secondary ticketing platform with 20% U.S. market share, trades at 5.1x EBITDA compared to peers at 7x+ levered. The company boasts unique assets including Skybox ERP (used by 70% of brokers), a loyalty program, and a white label business (20% of revenue). Recent acquisitions include Vegas.com and Wavedash, expanding their reach and capabilities. Vivid Seats is pursuing international expansion, targeting a $40 billion market. The company's Vivid Resale segment generates high returns on invested capital. Despite strong fundamentals and growth, Vivid Seats' valuation has compressed significantly since going public via SPAC. Management expects sustained double-digit growth and long-term EBITDA margins of 30%. The base case model forecasts a $9.19 share price, representing 183% upside. Recent reports suggest Vivid Seats may be exploring a sale, with potential strategic and financial buyers identified. Key risks include competition and market dynamics in the ticketing industry.

Read the full article here. Read time: 23 min