YB new stock pitches (Wed, Nov 13)

*More pitches from Baron FinTech Fund in “The Rest of the Pitches” section.

Primerica, Inc. (PRI) is a middle-income financial services company with 145,000 sales representatives, offering life insurance and investment products. The company boasts a 26.5% ROE, more than double the industry average, due to its asset-light model where 80-90% of risk is reinsured. Primerica's competitive advantage lies in its multi-level distribution model, allowing cost-efficient service to small customers through independent contractors. The company has grown EPS at a 12% CAGR over the past five years and expects acceleration from sales force growth, higher investment sales and asset-based fees, and 4-5% annual share repurchases. Primerica serves an growing need for financial planning in the underserved middle-income segment (54% of U.S. households with $30,000 to $130,000 annual income). The stock was purchased at 12 times forward earnings, considered a bargain for a high-quality, double-digit EPS compounder with potential for faster growth following the divestment of an unprofitable senior health business.

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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)

Emerita Resources Corp. (EMO.V) is embroiled in a legal battle for the rights to the $25 billion Aznalcóllar mine in Spain. Strong evidence of corruption in the tender process has led to 16 defendants facing trial in March 2025. If Emerita wins, it could gain rights to a world-class zinc-copper-lead asset. The company's case is supported by court documents revealing inappropriate calls, manipulation of the points system, and arbitrary decisions favoring the winning bidder, Minorbis-Grupo México. The tender was awarded to a non-existent company, and appeals by the accused have been dismissed. Emerita's bid was economically superior, offering €641.5 million compared to Minorbis's €304.6 million. The Aznalcóllar project includes two large deposits with high-grade resources totaling over 200 million tons. Currently trading at $0.57, Emerita's price is backstopped by its IBW asset. The price target is $4 on conviction, with potential to exceed $6 if awarded the tender.

Read the full article here. Read time: 11 min

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

SEMITEC Corporation (6626.T), a specialty temperature and infrared sensor manufacturer, is trading at 0.8x P/TBV and 6.5x P/E. The company, 39% family-owned, has seen gross margins increase from 26% in 2013 to 38% currently, with 85% of sales coming from international markets. SEMITEC has repurchased 5.4% of its float in the past 9 months and offers a 2% dividend. With a strong cash position of 11B Yen, low debt of 1.1B Yen, and tangible book value of 2,100 Yen per share, the company appears undervalued. The upcoming earnings report may be impacted by recent Yen fluctuations, as the currency strengthened from 160 to 143 in Q3 before weakening to 153 in October. Given its solid financials, family ownership, and capital allocation strategy, the current valuation at 20% below tangible book value seems inappropriate for this export-oriented company.

Read the full article here. Read time: 2 min