High signal stocks #11

Hello and happy Sunday!

There were 12 new stocks added to the High Signal List this week.

The High Signal List slightly outperformed the S&P last week (1.76% v 1.31%).

This brings the overall outperformance to over 3.5 points since starting the list two months ago.

Below is a free overview for everyone. YB Premium subs get four more overviews, plus the link to the spreadsheet with all of the High Signal Stocks in the YB PREMIUM PITCHES section.

As a reminder, these are AI summaries. They include citations for the data, but should be double-checked. They are just meant to be quick overviews to help you determine if you want to dig in deeper.

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Karooooo (KARO) - Price: USD 45.49 | Market Cap: USD 1.41B | EV/EBITDA (NTM): 9.3x | Net Leverage: USD 31.0M net cash

Recently highlighted by Gustav in their portfolio overview (link)

Karooooo is a vertically integrated SaaS platform for connected vehicles, generating 97% of its revenue from subscriptions across 2.6 million subscribers, primarily in South Africa and Southeast Asia. While the market prices KARO as a mature, low-growth regional industrial at 9.3x NTM EV/EBITDA, our variant perception is that the company is a mispriced "Rule of 60" compounder currently undergoing a structural growth acceleration that is invisible to investors focusing solely on headline currency headwinds. This acceleration is evidenced by Cartrack’s SaaS ARR growing 28% YoY in USD (22% in constant currency) in Q3 2026 (the fourth consecutive quarter of acceleration) driven by the successful cross-selling of high-margin AI Video and "Cartrack Tag" solutions which lifted South African ARPU by 7%. Why now: The company is hitting a critical inflection point in Southeast Asia, where net subscriber additions surged 30% year-to-date, validating that their high-margin, vertically integrated model is portable beyond their home market. At 9.3x NTM EV/EBITDA, the stock trades at a fraction of the valuations afforded to slower-growing SaaS peers; a re-rating to a conservative 13x multiple, justified by their 28% operating profit margins and durable 20%+ revenue growth profile, implies approx. 40% upside in the next 12 months. Key risks include exposure to South African rand volatility and political instability (72% of subscription revenue); the thesis is disconfirmed if commercial customer retention falls below the current 95% or if operating margins contract below the guided 27-30% range due to failed expansion investments.

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Thanks for reading!

Connor

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What are high signal stocks?

Yellowbrick tracks thousands of investors and collects 10,000+ stock pitches each year. The stock pitches from the best investors are put in the Elite Investor Feeds on Yellowbrick (link).

However, many stocks owned by great investors are never publicly pitched by those investors. This email (and the corresponding spreadsheet) tracks all stocks that I know are owned by good investors (whether that good investor has pitched them publicly or not).

YB ELITE INVESTOR PITCHES

YB PREMIUM SUBSCRIBERS ONLY

New stock pitches from Yellowbrick Elite Investors that were added to the website this week. Fewer than 5% of the 3,000+ investors we track qualify as an Elite Investor.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

HIGH SIGNAL STOCKS

YB PREMIUM SUBSCRIBERS ONLY

AI overviews (with data citations) of new stocks added to the High Signal Stocks list.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

THAT’S ALL FOLKS

Thank you so much for reading today’s email!

If you ever have any feedback, suggestions, or questions, you can just reply to this email or email me at [email protected].

Connor

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