High signal stocks #13

Hello and happy Sunday!

I added 11 tickers (10 new) to the High Signal List (the full list, along with financials for all of the stocks, is shared with Premium subs later in this email).

Rough week in the market, but last week’s additions to the High Signal List actually had a great week, led by Galantas Gold (GAL.L) popping 124% and Alliance Entertainment (AENT) gaining 30%.

But overall, we got hit pretty good last week with the High Signal List down an average of -2.34% v -1.24% for the S&P. The All World Index was down 2.39%, which helps explain why the High Signal List was down so much (it contains many international stocks).

Since its inception, the High Signal List has still handily outperformed the S&P.

Below is a free overview for everyone. YB Premium subs get more overviews and access to the full High Signal List further down in this email.

As a reminder, these are AI summaries. They are just meant to be quick overviews to help you determine if you want to dig in deeper.

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Choice Hotels International (NYSE:CHH) - Price: $100.48 | Market Cap: $4.58B | Enterprise Value: $6.56B | EV/EBITDA (NTM): 10.3x | Net Leverage: 3.8x

This is a summary of the write-up from Voss Capital’s Q4 2025 fund letter (link)

Voss Capital has initiated a new 5.3% portfolio position in Choice Hotels International (CHH), an asset-light hotel franchisor with 60%+ EBITDA margins trading at 10.7x EBITDA (bottom 2.5% of its 10-year range) after falling from $154 to $106 due to U.S. RevPAR declines and lack of domestic room growth. The company is actively shifting its 7,575-hotel portfolio toward higher-margin segments: Extended Stay now comprises 9% of total rooms (11.5% of U.S. rooms) with 12% year-over-year growth, a 6% royalty rate, 40% of the active pipeline, and posted +3.1% ADR with flat RevPAR versus industry-wide declines; International operations (24% of rooms) are scaling rapidly with direct franchising growing to 41% of the portfolio from 19% three years ago, with EBITDA targeted to double to $50 million by 2027 and EBITDA per international unit tripling from 2022 to 2025; and 97% of pipeline rooms are non-economy properties. The company has approximately $700 million in cash (14% of market cap) tied up in balance sheet investments in Cambria and Everhome Suites brands that will be unlocked through sales of completed properties with secured 30-year franchise agreements, providing capital for buybacks at distressed valuations. CHH benefits from demographic tailwinds with 30% of guests over 60 (a demographic projected to increase spending 70% by 2030) and 13% growth in SMB business driven by construction and utility sector demand, while the company is guiding for a return to net U.S. room growth. With 26% short interest, 40% insider ownership, a recent change-in-control compensation amendment suggesting M&A preparation, and historically trading at a premium to peers from 2016-2023 before decoupling in 2024-2025, a reversion to the 20-year median valuation of 14x forward EBITDA (still a 3-6x discount to Hyatt, Hilton, and Marriott) implies approximately 50% upside.

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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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