Top stock ideas (Tues, Nov 14)

👋 Good Morning!

I accidentally deleted this email and had to re-do it all, so that’s my excuse if there is an error somewhere.

Our AI read and summarized 224 articles today and found:

  • An analyst report on Wynn (stock idea)

  • Moody's warning on the massive U.S. debt burden has turned into a non-event (news)

  • What the WeWork bankruptcy means for bank owners (article)

  • An arbitrage opportunity in GBTC (stock idea)

  • and more…

Thanks for reading! I hope you have a great day.


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🥇 Polen Capital new small/mid-cap position: Doximity

Doximity, Inc. operates a cloud-based digital platform for medical professionals in the United States. The company's platform provides its members with tools built for medical professionals, enabling them to collaborate with their colleagues, coordinate patient care, conduct virtual patient visits, stay up to date with the latest medical news and research, and manage their careers.

Ticker: DOCS | Price: $22.99 | Price Target: N/A | Timeframe: N/A

📢 Social Network | 🥼 Doctors | 📈 Bullish Idea

Doximity is an application for doctors and other healthcare professionals and operates like a social media platform for doctors. It primarily makes money on advertising for biopharmaceutical companies. Its offering is unique, given the ability to target physicians accurately by specialty and reach a high percentage of a drug company’s target physician list, making it an attractive alternative to spending on sales representatives. It also has a unique advertising format that meets regulatory requirements, captures physicians while working, and provides drug insight and detail that’s more attuned to medical journal advertising. Doximity is already a very profitable business, and with attractive software-like economics without having to spend much to acquire users or customers, it has an attractive runway for growth.

Read the full article here. Read time: 6 min


🥈CBD - Risk/reward improved. LONG

Companhia Brasileira de Distribuição engages in the retail of food, clothing, home appliances, electronics, and other products through its chain of supermarkets, specialized stores, and department stores in Brazil.

Ticker: $CBD | Price: $0.73 | Price Target: $2.20 (+200%) | Timeframe: N/A

🛍️ Retail Stores | 🇧🇷 Brazil | 📈 Bullish Idea

CBD presents a compelling long investment opportunity, evidenced by solid earnings with revenue up 10% YoY, same-store sales increasing by 6.6%, and an improved EBITDA margin now at 7%. With an EBITDA multiple of approximately 4x, factoring in lease expenses and the potential to reduce this to less than 3x upon achieving their 8-9% target margin, the valuation is attractive. CBD's technical sell-off post-spin appears over, with the stock trading at just 0.1x EV/sales despite ongoing progress in the company's turnaround and debt reduction through strategic asset sales. With the Casino Group possibly eyeing the sale of CBD’s grocery assets for a clean exit from Latin America, the stock price is poised for an adjustment towards fair value, supported by short-term catalysts such as the sale of Cnova shares, further divestments, and an upcoming analyst day. The risk/reward profile is favorable, supporting a long position.

Read the full article here. Read time: 4 min


🥉Wynn: Macau Sales Recovery Continues but Lags Peers; Shares Undervalued

Wynn Resorts operates luxury casinos and resorts

Ticker: WYNN | Price: $85.60 | Price Target: $122 (+42%) | Timeframe: N/A

Casinos | 🏩 Resorts | 📈 Bullish Idea

Wynn Resorts, a narrow-moat company, saw its shares drop 5% in after-hours trading due to disappointing results in its Macau operations. This decline was attributed to the company's peninsula product losing traffic to its Palace resort and other newer casinos on the Cotai strip. However, Wynn's Macau recovery is on track, with third-quarter and year-to-date revenues reaching 76% and 63% of 2019 levels, although lagging behind MGM's performance. Despite this, Wynn's retail and hotel sales in Macau have exceeded pre-pandemic levels, indicating strong demand. Wynn's adjusted EBITDA in Macau was at 85% of the 2019 level, benefiting from cost efficiencies and a shift to higher-margin mass gaming from VIP gaming. In Las Vegas, Wynn's revenue increased by 14%, with hotel room occupancy at 90% and adjusted EBITDA up by 12%, achieving a 35.5% margin. The company anticipates continued strong demand in Las Vegas, boosted by upcoming major events like the Formula One race and the Super Bowl. Given these factors, Wynn's fair value estimate of $122 is expected to remain stable, and the shares are seen as undervalued. Plans include lifting the 2023 Macau recovery forecast to mid-60s percentage of pre-pandemic levels and increasing the 2023 Las Vegas sales forecast to 14% with a maintained 38% adjusted EBITDA margin estimate.

Read the full article here. Read time: 7 min


Which featured trade idea was your favorite?

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Yesterday’s Poll Results (link):

🟩🟩🟩⬜️⬜️ Weatherford International ($WFRD) [43%]

🟨🟨⬜️⬜️⬜️ Fiserv ($FI) [31%]

🟥⬜️⬜️⬜️⬜️ Fidelity National Financial ($FNF) [26%]

Your Thoughts:

  • 🛢️ alpo*** ($WFRD): Love oil and gas pipelines. Necessary infrastructure. Not much choice for companies needing transit. On my watchlist.

  • 🛢️ shad*** ($WFRD): I work with Fiserv as our main financial core provider where I work. They are one hot mess. Constant turnover on project and implementation leads, sales tries to upsell you before what you purchased is implemented. Implementation milestones are frequently missed. Hard pass.

  •  💸 dana*** ($FNF): Fiserv isn’t strong enough to compete with FIS, and FNF has a grip on their corner of the insurance business.

Keep reading until the end of the email for the bonus stock ideas!


New York Fed inflation expectations remain steady amid slowing earnings growth - CNBC Television 

Moody's warning on the massive U.S. debt burden has turned into a nonevent - CNBC 

Inflation may be easing but consumer prices remain high - Fox Business 

Consumer spending fell in October, according to new CNBC/NRF Retail Monitor tracking card transactions - CNBC 

Exxon aims to become a top lithium producer for electric vehicles with Arkansas drill operation - CNBC 

China's E-Commerce Giants Alibaba, JD Boost Singles' Day Sales - Bloomberg

Institutional and retail investors have been fighting this rally, says Fundstrat's Tom Lee - CNBC Television 

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London Company Small/Mid Cap new position: Waters Corporation

Waters Corporation, a specialty measurement company, provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments, Waters and TA

Ticker: $WAT | Price: $260.49 | Price Target: N/A | Timeframe: N/A

🔎 Analysis | 📈 Bullish Idea

WAT designs, manufactures, sells, and services high-performance liquid chromatography (HPLC), mass spectrometry (MS), and thermal analysis technologies. These solutions are invaluable tools in R&D and quality control processes for industries like pharmaceuticals, life sciences, and food & beverage. Sources of moat include its entrenched leadership position, the heavily regulated nature of drug production, high switching costs, & its Empower software— which is the standard in HPLC Quality Assurance/Quality Control settings. We’re attracted to its strong balance sheet, predictable cash flows (~60% recurring revenue), and compelling economic moat

Read the full article here. Read time: 7 min


Diageo: Profit Warning, Mid-Term Outlook Cut, Return to 2018 Levels; Time To Buy

Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages.

Ticker: DEO | Price: $142.56 | Price Target: N/A | Timeframe: N/A

🍾 Alcohol | 💰 2.9% Dividend | 📈 Bullish Idea

Diageo issued a profit warning due to weaker than expected sales in LATAM & Caribbean, resulting in a 14% share price drop. The company has downgraded its medium-term Adjusted EBIT growth forecast from 6-9% to 5-7%, reflecting post-COVID normalization and high inflation. Despite this, Diageo, trading at a P/E of 20x FY19 EPS, remains a strong investment, with an expected 64% total return (20.4% annualized) by June 2026. The company's H1 FY24 outlook predicts a 20% decline in organic sales in LATAM & Caribbean, but sequential improvement in North America and gradual improvement in H2 FY24. The industry-wide slowdown in spirits is apparent, yet Diageo's diverse portfolio and premium product mix, alongside its resilient Spirits franchises, provide a solid foundation. Current valuation metrics, including a 17.1x P/E relative to FY23 and a 2.9% dividend yield, along with ongoing share buybacks, make Diageo an attractive buy despite the recent profit warning and revised growth projections.

Read the full article here. Read time: 8 min


Grayscale Bitcoin Trust (GBTC)

Grayscale Bitcoin Trust is a closed end fund that offers investors the ability to purchase publicly traded shares on the OTCQX Market. Each of the 692,370,100 shares outstanding represent a claim on 0.00089744 of a bitcoin.

Ticker: OTC: GBTC | Price: $29.06 | Price Target: N/A | Timeframe: N/A

🪙 Bitcoin | 📈 Bullish Idea

Grayscale Bitcoin Trust (GBTC) is a closed-end fund traded on the OTCQX Market, offering investors an alternative way to invest in Bitcoin. Each of the 692,370,100 shares represents a fractional ownership of Bitcoin, simplifying the process of owning, storing, and managing Bitcoin investments compared to direct cryptocurrency ownership. However, a key drawback of GBTC is its closed-end structure, which means shares can trade at a premium or discount to the net asset value (NAV) due to market demand, unlike exchange-traded funds (ETFs) that can issue or retire shares to align with market demand. GBTC is pursuing a conversion to an ETF to eliminate this price-NAV disparity, a process underway since October 2021, with significant progress as of October 19, 2023. Currently, GBTC trades at a 14% discount to NAV, presenting an arbitrage opportunity for investors before its conversion to an ETF. Additionally, the upcoming Bitcoin halving event in March 2024 is expected to further drive GBTC's price appreciation. The halving, which reduces the Bitcoin block reward, inherently increases the cost of Bitcoin production, potentially leading to a price increase. GBTC's ETF conversion combined with the halving event offers a unique investment opportunity, making it an attractive proposition for those looking to invest in Bitcoin through a more traditional investment vehicle.

Read the full article here. Read time: 10 min


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