Today's top stock ideas (Wed, Dec 6)

👋 Good Morning!

Welcome to the 123 new readers who joined yesterday!

Our AI read and summarized 71 stock ideas, 1057 news articles, and 125 insider trades and found:

  • Amplitude has 90% upside potential (featured stock idea)

  • Spotify does its third round of layoffs (news)

  • The General Counsel at $SCHW sold 100% of their shares (insider trade)

  • 3 more bonus stock ideas

  • and much more…

Thanks for reading! Have a great day.

Connor

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FEATURED STOCK IDEA

REDDIT POST

Amplitude: is it a buy?

Amplitude is a leading product analytics platform that provides in-depth insights into user behavior and product performance, primarily catering to digital companies. It operates on a 'Customer Expansion Flywheel' model to drive growth through data acquisition and insight generation.

Ticker: AMPL | Price: $11.47 | Price Target: $22 (92%) | Timeframe: 5 years

📊 Data Analysis | 💻 Enterprise SaaS | 📈 Bullish Idea

Amplitude, a leader in product analytics, presents an intriguing investment opportunity with its suite of tools offering detailed insights into user behavior and performance, appealing to top digital firms. The company's 'Customer Expansion Flywheel' model fosters growth through a cycle of data collection, insight generation, and resultant revenue growth as clients enhance their products. While Amplitude has displayed promising growth, it still faces typical startup challenges like financial losses which investors must weigh for its long-term prospects. In the competitive landscape, Mixpanel emerges as a key rival, but Amplitude's comprehensive feature set gives it an edge with larger organizations, a sentiment echoed in Reddit's community feedback. CEO Spencer Skates and the management team have shown adaptability and transparency, vital in tech. The product analytics market, projected to grow at a CAGR of 20.1%, coupled with an increasing demand for analytics in digital transformation across sectors, augments Amplitude's growth potential. Financially, strong revenue growth is positive, but share dilution and consistent negative free cash flow are concerns, while healthy cash reserves and debt management alleviate some risks. Valuation considers a conservative yearly growth rate of 17.7% with a five-year Price-to-Sales ratio target of 4.5, remaining sensible despite high-profile industry acquisitions like Segment by Twilio. Amplitude's current stock price reflects potential future value with noticeable upside, premised on the company's growth strategy and market prospects. However, financial challenges and competitive pressures require careful monitoring. This analysis serves as a foundation for discussion and is not financial advice; a disclaimer, Youtube link for visual aid, and valuation sheet are provided for deeper insight.

Read the full article here. Read time: 5 min

POLL - FEATURED STOCK IDEA

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How do you rate the featured stock idea?

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Yesterday’s Rating (link):

Air Products and Chemicals ($APD)

🟩🟩⬜️⬜️⬜️ - Buy (35%)
🟥🟥⬜️⬜️⬜️ - Pass (35%)
🟨⬜️⬜️⬜️⬜️ - Watchlist (30%)

  • grove**** (pass) - Prefer Linde over this stock

  • emoj**** (buy) - As the US is increasing its chip manufacturing, $APD is poised to be a major supplier (esp. neon, an essential component in chip manufacturing).

* There are more stock ideas later in the email!

MARKET OVERVIEW

Are you short-term bullish or bearish on the market?

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Yesterdays poll rating (link): 50% bullish

Similar to yesterday in terms of bearishness. Yellowbrick Road readers were split evenly on bullish v bearish, most of the indexes were negative (with the Russell getting hit pretty hard again), the Fear v Greed index is still pretty bullish (though it fell 1 point), and the news sentiment dipped negative for the first time. Some readers pointed out that the market looks a little overbought and may be sold on the economic data that comes out this week.

STOCK MARKET NEWS

Today’s news is brought to you by Chartr. Join 300,000+ who love snackable charts and easy-to-remember data insights on business, tech and society. Sign up here.

Job openings slide to 8.7 million in October, well below estimate, to lowest level since March 2021 - CNBC 

GitLab shares soar as developer-tools company posts first adjusted operating profit - CNBC 

Eli Lilly weight loss drug Zepbound now available at pharmacies as rival Wegovy faces shortages - CNBC 

AT&T chooses Ericsson for new US telecom network, will drop Nokia - Reuters 

Spotify announces third and largest round of layoffs - Market Watch 

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QUIZ

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Which company was originally formed in 1911 as the Computing-Tabulating-Recording Company (CTR)?

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Yesterday’s Question (link): Who was the first woman to serve as the chair of the U.S. Federal Reserve?

Answer: Janet Yellen. She was also the first women to become the United States secretary of the treasury.

INSIDER TRADES

The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here

10% Owner at Pulse Biosciences, Inc. ($PLSE) purchased 152,944 shares at $9.06/share ($1.39M total) which increased their holdings by 254.9% (link)

Director at Petco Health & Wellness Company, Inc. ($WOOF) purchased 30,000 shares at $3.33/share ($99,924.00 total) which increased their holdings by 74.8% (link)

10% Owner at Carmell Corp ($CTCX) purchased 13,617 shares at $2.79/share ($38,053.12 total) which increased their holdings by 66.2% (link)

GENERAL COUNSEL at HOULIHAN LOKEY, INC. ($HLI) sold 1,000 shares at $107.17/share ($107K total) which decreased their holdings by 100.0% (link)

General Counsel at SCHWAB CHARLES CORP ($SCHW) sold 7,162 shares at $60.72/share ($435K total) which decreased their holdings by 100.0% (link)

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BONUS STOCK IDEAS

BLOG POST

Cambium Networks (CMBM – $ 131m)

Cambium Networks is a developer and manufacturer of wireless broadband and Wifi networking infrastructure solutions. The company provides wireless solutions for a variety of applications, including backhaul, broadband access, Wi-Fi, and video surveillance.

Ticker: CMBM | Price: $4.75 | Price Target: N/A | Timeframe: N/A

🛜 Networking | 📈 Bullish Idea

Cambium Networks (CMBM – $ 131m). Cambium Networks is a developer and manufacturer of wireless broadband and Wifi networking infrastructure solutions. The shares have massively derated over the past year, reflecting poor operating performance. But, as we know from following Surgepays, there are going to be massive investments in networking infrastructure. The BEAD program alone is >$40bn, and Cambium stands to benefit from it. Indeed the company already received a big order from Nextlink (amount undisclosed). Cambium is trading at roughly 13x 2024e ev/ebitda, but growth might be on the cusp of significant acceleration. Cambium has a clean b/s and insiders have been adding.

Read the full article here. Read time: 1 min

HEDGE FUND

Atai Capital Management: Enad 7 Global

Enad Global 7 (EG7.STO) is a PC/Console video game developer listed on the Nasdaq First North Exchange.

Ticker: EG7.STO | Price: SEK 17.84 | Price Target: N/A | Timeframe: N/A

🕹️ Gaming | 🇸🇪 Sweden | 📈 Bullish Idea

Enad Global 7 (STO: EG7) is a PC/Console video game developer listed on the Nasdaq First North Exchange. After a tumultuous past filled with dilutive acquisitions, setting and missing high expectations, and a less-than- stellar management team, the company is finally positioned for the future with a significant net cash balance (~28% of its market cap today) and a new S-Tier management team and board. The prior CEO(also the co-founder of EG7) was ousted in20 21.His ownership would later be purchased in its entirety by the current CEO (Ji Ham) and Chairman (Jason Epstein) in mid-2022 (they collectively own ~12% of all shares outstanding today). They would also later participate in the open market purchase of an additional ~2.00% of the total shares outstanding, a move orchestrated by the board and executive team earlier this year. The company is now reinvesting into its most popular IPs, growing its publishing arm, and shifting one of its unprofitable development studios to a profitable work-for-hire business. At their September investor day, the company laid out mid-term financial targets, which imply that EG7 is trading at just ~1.15x 2026E EBITDA today.

Read the full article here. Read time: 24 min

ANALYST REPORT

[SHORT REPORT] Arbor Realty Trust is a Donut

Arbor Realty Trust is a real estate investment trust (REIT) that provides a range of financial services to multifamily and commercial real estate markets. Its services include loans for multifamily and commercial properties, investing in fixed-rate and hybrid adjustable-rate mortgage backed securities, and investing in bridge loans. The company also invests in various structured finance methods for commercial real estate, including senior mortgage loans, mezzanine loans, and preferred equity.

Ticker: ABR | Price: $13.43 | Price Target: $0 (-100%) | Timeframe: N/A

🏠 REIT | 🏦 Financial Services | 📉 Bearish Idea

Arbor Realty Trust is facing significant challenges as detailed in the latest CLO performance trustee data, which show a concerning increase in delinquencies and a severe decline in debt service coverage ratios (DSCR). In November, delinquencies have surged roughly 40-50% over the past month, with some tranches moving from 0% to nearly 30% delinquency rates, indicating a continual negative trend. Further analysis reveals that short-term delinquencies (<30 days) are failing to improve and instead, are becoming long-term delinquencies (>30 days), suggesting a likely persistence of this worrying pattern. Additionally, the quarterly DSCR data for October 2023 demonstrates that every single CLO is at a historically low point, signaling that their portfolio is significantly underwater. Viceroy is short on Arbor, articulating that the company's entire loan book appears distressed, the value of the underlying collateral is exaggerated, and with the bulk of loans maturing within the next 18 months, they do not meet the criteria for refinancing. This grim diagnosis concludes with the stark outlook that Arbor's worth is effectively zero, depicted as a donut ($0.00), in a sector rife with poor judgment.

Read the full article here. Read time: 3 min

+3 POINTS - WEEKLY TOURNAMENT

Which bonus stock idea was the most compelling to you?

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Yesterday’s Poll Results (link):

🟩🟩🟩⬜️⬜️ [SHORT] Mondee ($MOND) [38%]

🟨🟨⬜️⬜️⬜️ Fleetcor ($FLT) [32%]

🟥⬜️⬜️⬜️⬜️ Boston Beer Company ($SAM) [30%]

I think this is the first time a short report has ever been the top pick!

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🏆 This Week’s Leaderboard

  1. stoc**** (98 points)

  2. dr.sist*** (98 points)

  3. bucl**** (98 points)

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