YB new stock pitches (Fri, Jul 11)

B. Riley Financial (RILY), a small-cap investment bank trading at 3.9x projected 2025 P/E, is recovering from a short seller attack and debt issues after overleveraging for Targus and The Franchise Group acquisitions. Its core capital markets business generated $272M EBITDA in 2021, and despite carrying $1.78B in debt, the company maintains $150M in cash. RILY has reduced debt by $108M through negotiated exchanges and sold assets like GlasRatner for $117M. The company still owns valuable stakes in Babcock and Wilcox ($28M current value, $196M potential), DoubleDown Interactive ($50M current value, $150M potential), and communications companies ($100-200M estimated value). Though RILY has reported late SEC filings and Q4 2024 showed a $50M operational loss, it achieved positive net income of $48M ($1.57/share). With a $20 price target by 2028, RILY could benefit from capital markets recovery under the Trump administration, potentially generating up to $300M annually ($10/share) if small-cap market share rebounds.

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Acorn Energy (ACFN) is positioned for significant growth through its OmniMetrix subsidiary, which dominates the backup power monitoring sector with 45% recurring revenue at 90% margins. Q1 results showed impressive metrics with revenue up 45% YoY and EPS jumping from $0.03 to $0.19, while the company maintains $2.6M in cash and zero debt. The market opportunity is substantial, with fewer than 10% of North America's 4 million standby generators currently monitored, despite increasing regulatory requirements for runtime logging and emissions tracking. OmniMetrix is executing on a $5.4M contract with a Tier-1 wireless carrier for cell tower monitoring, with $1.7M in hardware revenue expected this year and $3.7M in 2025, plus subsequent long-term monitoring contracts. A partnership with CPower enables demand-response program participation, potentially doubling the economics per monitored generator. With management guiding for 20%+ annual growth, a planned Nasdaq uplist in 2H2025, 35% insider ownership, and trading at just 3x 2025 sales versus 9x for IoT M&A comparables, the stock could reach the low $30s per share (4x 2026 revenue), representing a potential double from current levels.

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MedinCell S.A. (MEDCL.PA) is a French biotech company utilizing its patented BEPO technology for long-acting injectable (LAI) drugs, which encapsulates medicine in biodegradable gel depots for slow release over weeks. The company partners with pharmaceutical firms who conduct clinical trials, while MedinCell receives milestone payments and high single-digit royalties. Their leading product is Uzedy, a schizophrenia treatment developed with Teva, which could generate over $100 million in royalties. A second product, Olanzapine LAI, also targeting schizophrenia but for more severe cases, awaits FDA approval in the latter half of 2024 and could potentially yield royalties closer to $200 million annually. Additionally, MedinCell has a pipeline of six more medicines in development with AbbVie. The company is approaching breakeven in the coming fiscal year, and with a relatively fixed cost base, additional royalties would contribute directly to profits, potentially generating net income well over €150 million with strong growth potential, positioning the company as a possible multi-bagger investment.

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