YB new stock pitches (Fri, Jan 9)

Koninklijke Vopak N.V. (VPK.AS), a 400-year-old liquid storage operator founded in 1616 in Amsterdam, operates dozens of major ports and terminals globally storing oil, gas, fuels, and chemicals, representing critical infrastructure for global industrial supply chains. Despite its venerable position, shares have languished due to investor concerns about long-term fossil fuel demand, prompting Vopak to pivot toward natural gas and low-carbon fuels storage while shifting customers from short-term agreements to 10-20 year contracts with inflation-linked pricing. The company trades at 11x forward earnings and has been aggressively repurchasing shares, buying back 6.3% in 2024 and another 1.8% through June 30, 2025, with limited capacity due to more than half the company being owned by Dutch investment holding company HAL Trust NV. Vopak holds a 42.2% interest in joint venture Aegis Vopak Terminals (AVT), which successfully IPOed in June 2025 and operates 20 tank terminals at 6 Indian ports, with this stake worth €1,095 million or 25% of Vopak's market capitalization and 15% of enterprise value. Adjusting for the AVT stake, Vopak trades at approximately 6.7x 2026 proportional EBITDA, which appears far too low for a company of this quality operating critical infrastructure.

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Ziff Davis (ZD), a profitable tech company with five business segments (Connectivity, Cybersecurity, Health and Wellness, Gaming, and Technology/Shopping), is trading at 0.92x price-to-sales versus 4.3x in 2021 despite maintaining close to 30% EBITDA margins, prompting management to announce a strategic review in November 2025 to unlock shareholder value through potential spinoffs or asset sales. The company has experienced four years of multiple compression while peers in each segment trade at 3-7x higher multiples, with a sum-of-parts analysis suggesting a combined market cap of $3-7 billion versus the current $1.34 billion valuation. Management has been aggressively buying back stock (spending $485 million of $855 million free cash flow on buybacks since 2022, reducing share count by 16%) and engaging in insider purchases, with the CEO buying shares at $58.86 and $39.56 while selling above $80. The company faces headwinds from AI disruption affecting SEO traffic and weak consumer spending, though management believes the worst SEO-to-GEO transition impacts are behind them, and segments like Cybersecurity and Connectivity appear more resilient to AI threats. With a forward P/E of 4.5x, $500 million cash against $864 million debt (including low-rate convertibles), and five consecutive quarters of revenue growth returning TTM revenues to $1.457 billion, the stock has a price target of $82.13 by mid-2028, assuming continued buybacks, moderate revenue growth, and a return to 2.0x price-to-sales ratio.

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The investor added to their AMAT position, viewing Applied Materials as a semiconductor equipment leader benefiting from AI chip complexity requiring more manufacturing process steps and new materials, creating a 'complexity tax' that drives structural demand. AMAT trades at $296 per share with a $234.7B market cap and 26x forward P/E after an 80% run-up, reflecting rich valuation but justified by secular AI-driven growth. The company posted record FY2025 revenue of $28.4B (+4% YoY) with 48.8% gross margins, 29.2% operating margins, and strong free cash flow of $5.7B, though down from $7.49B in FY2024. Revenue is geographically concentrated in Asia (78%), with China representing 30% of sales despite recent export controls that will reduce FY2026 revenue by ~$600M. The bull case centers on AMAT being a structural compounder as chips require more layers and advanced materials, driving demand for its deposition, etch, and metrology tools, while the growing services business (22% of sales) provides recurring revenue stability. Key catalysts include AI chip capex from hyperscalers, memory market recovery in mid-2026 particularly for HBM, and technology wins at leading-edge nodes like 3nm and 2nm with gate-all-around transistors. Major risks include stricter U.S.-China export controls potentially eliminating more Chinese revenue, cyclical semiconductor downturns affecting customer capex, customer concentration with TSMC and Samsung representing significant portions of sales, and competitive pressure from Lam Research and Tokyo Electron potentially eroding market share and pricing power.

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