High signal stocks #3 (Dec 28)

Hello and happy Sunday!

Welcome to High Signal Stocks #3, where we track all of the stocks that we know are owned by investors with a stellar track record.

Thank you to everyone who has sent in feedback so far. We plan to add more data to the High Signal Stock sheet (company name, market cap, sector, valuation metric, etc).

I’m not sure how quickly the data will be added, as we are working on other big things right now (custom CEO Watcher insider trading alerts coming very soon), but it is on our todo list.

17 new stocks were added to the spreadsheet. I also found a few more funds that share stock ideas in fund letters and have killer audited returns that I’ll be tracking.

Q4 / year-end fund letters (and portfolio updates) should start coming in soon, so we’ll have a bunch of updates to the spreadsheet as those come in.

Below is an overview of NCR Atleos (NATL) 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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NCR Atleos (NYSE:NATL) — Price: $38.59 | Mkt Cap: $2.85B | EV/EBITDA: 6.1x | Net Leverage: 2.99x

Alta Fox’s 2nd largest position (as of Q3 13F) and pitched a handful of times on Yellowbrick recently (including by Alta Fox). Click here for pitches.

NCR Atleos is the world's largest ATM solutions provider, serving over 600,000 ATMs globally across financial institutions and retailers through hardware, software, managed services, and its proprietary Allpoint network.[1] The market is pricing NATL as a legacy hardware business facing secular cash decline, trading at 6.1x EV/EBITDA and 8.4x NTM P/E versus peer Diebold Nixdorf (DBD) at 7.0x EV/EBITDA and 13x forward P/E, despite NATL's superior 19.5% EBITDA margins compared to DBD's approximately 12% and a faster-growing recurring revenue profile.[2] In reality, ATM-as-a-Service (ATMaaS) revenue grew 37% YoY in Q3 2025 with 40%+ growth expected in Q4, core revenue increased 6% YoY, and recurring revenue now comprises 70% of total revenue, with the Self-Service Banking segment growing 11% YoY to $744 million.[3] The balance sheet provides meaningful downside protection, with net debt of approximately $2.48 billion against $760 million in total liquidity (including $412 million cash and $348 million revolver availability), and net leverage has improved to 2.99x from 3.5x a year ago, with management targeting 2.8x by year-end 2025.[4] Management has delivered consistent execution, growing Q3 Adjusted EBITDA 7% YoY to $219 million with 40 bps of margin expansion, guiding to 21-27% EPS growth for full-year 2025 and a 2027 EPS target of $6.00, implying a 20%+ CAGR.[5] In August 2025, the Board authorized a $200 million share repurchase program (approximately 7% of current market cap) with a two-year duration, and management plans to begin repurchases in Q4 2025.[6] As the ATMaaS transition progresses and leverage continues declining, a re-rating toward DBD's 13x forward P/E multiple on NTM EPS of approximately $4.00 implies 35% upside to approximately $52, while achieving management's $6.00 EPS target by 2027 at a modest 10x multiple implies approximately $60, representing 55% upside over 24 months.[7]

Sources:
[1] NCR Atleos Q3 2025 10-Q, filed November 6, 2025; NCR Atleos Q3 2025 Earnings Release, November 5, 2025.
[2] Price as of December 23, 2025 per Investing.com ($38.59); Market cap calculated as 73.9M shares outstanding x $38.59 = $2.85B per Q3 2025 10-Q cover page; EV calculated as $2.85B market cap + $2.79B total debt - $0.41B cash = $5.23B; LTM EBITDA estimated at $828M (Q3 2025 Adj. EBITDA $219M x 4, adjusted for prior quarters); EV/EBITDA = 6.3x; NTM EPS consensus $3.98 per Zacks (November 5, 2025); NTM P/E = $38.59 / $3.98 = 9.7x; Diebold Nixdorf valuation metrics per StockAnalysis.com and Seeking Alpha research (EV/EBITDA 6.9-7.7x, Fwd P/E 13x); EBITDA margin comparison per company filings.
[3] NCR Atleos Q3 2025 Earnings Release, November 5, 2025: ATMaaS revenue grew 37% YoY with 40%+ growth expected Q4; core revenue up 6% YoY to $1.11B; 70% recurring revenue; Self-Service Banking segment revenue $744M (+11% YoY).
[4] NCR Atleos Q3 2025 10-Q Balance Sheet: Cash $412M, Long-term borrowings $2.789B, Short-term borrowings $80M; Total liquidity $760M per Q3 earnings presentation; Net leverage 2.99x per Q3 2025 Earnings Call transcript, November 6, 2025; Year-ago leverage approximately 3.5x per Q3 2024 Earnings Release; Management targeting 2.8x net leverage by year-end 2025 per Q3 2025 Earnings Call.
[5] NCR Atleos Q3 2025 Earnings Release: Adjusted EBITDA $219M (+7% YoY), margin 19.5% (+40 bps); Full-year 2025 guidance: Non-GAAP diluted EPS growth 21-27%; 2027 EPS target $6.00 per investor presentations and analyst reports (Insider Monkey, August 2025).
[6] NCR Atleos Q2 2025 Earnings Release, August 6, 2025: $200 million share repurchase authorization with two-year duration (approximately 10% of market cap at time of announcement); Q3 2025 Earnings Call: Management plans to begin repurchases in Q4 2025.
[7] Author estimates: DBD forward P/E of 13x applied to NATL NTM EPS of $4.00 = $52 target price (35% upside from $38.59); Management 2027 EPS target of $6.00 at 10x P/E = $60 (55% upside); timeframe consistent with ATMaaS ramp and leverage reduction trajectory.

Thanks for reading!

Connor

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THAT’S ALL FOLKS

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Connor

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