YB new stock pitches (Fri, Oct 24)

Vicor Corporation (VICR), a vertically integrated power management company with $360 million in cash, no debt, and over $1 billion in US manufacturing capacity in Massachusetts, is positioned for significant growth after securing a major hyperscaler deal (likely Google) ramping in Q1 and two OEM deals in Q3. The company has resolved previous yield issues, achieving 98% yields, and is preparing to fill out their previously underutilized factory capacity. High-margin licensing revenue has reached a $90 million annual run rate with line of sight to $200 million within two years, excluding other monetizable IP assets they own in the industry. Trading at a $2 billion enterprise value on $500 million revenue, the stock appears undervalued compared to peers, with current estimates not reflecting the revenue ramp from three new large customers. The company presents strong M&A target potential given the 78-year-old CEO's ownership of approximately 50% of shares and valuable IP portfolio, while the limited 22 million share free float creates potential for significant price volatility during any major run-up.

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Virco Manufacturing Corporation (VIRC), an educational furniture company founded by the Virtue family in 1950, trades at $7.40 with a $15 price target and 5.3x trailing P/E ratio. The company has been crushed over the past year but recently saw insider buying from CEO Robert Virtue and President Douglas Virtue, with the family owning 34% of shares combined. VIRC manufactures entirely in the US and could benefit from new reciprocal tariffs against importers, holding 20-30% of the domestic educational furniture market where three of seven competitors are importers. Despite a 30% decline in order backlog heading into the current back-to-school season, the company achieved its most profitable quarter in years through cost-cutting initiatives, generating $33 million in operating cash flow in 2024 against a $116 million market cap. Following post-Covid efficiency improvements, GAAP net income jumped from a 10-year average of $550,000 to $16.5 million in 2023, $21.9 million in 2024, and $21.6 million in 2025. The company initiated its first-ever shareholder returns in 2023 with a $0.02 quarterly dividend and aggressive share buybacks, retiring 1.7% of the float initially and authorizing additional $10 million for buybacks that could retire 5-8% of the float at current prices. Revenue has grown 4% annually over the past decade from $179 million to $269 million, with the domestic educational furniture market expected to grow 6% long-term, though the business remains highly cyclical and tied to interest rates and property tax collections.

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Hobonichi Co., Ltd. (3560.T), a Japanese premium paper planner company with a cult following, is at a growth inflection point driven by powerful tailwinds including 408% search growth in Mexico, September 1st 'Hobonichi Day' server crashes from overwhelming demand that may understate true market demand, strategic Amazon distribution expansion providing alternative channels and new customer discovery, and an intensely loyal user-generated content community that creates a formidable competitive moat and pricing power. However, significant risks include new US tariff regime suspension of the $800 de minimis exemption creating a 15% tariff plus processing fees that could destroy demand, quality decline reports in their premium Tomoe River paper causing ink feathering and bleed-through issues that attack their core value proposition, and rising competition from agile 'Hobonichi-killer' boutique brands founded by former fans using similar high-quality paper. The investment opportunity stems from information asymmetry where the market misunderstands the highly seasonal business model (with most sales from September 1st launch falling into Q1 of their August 31st fiscal year-end) and the stock's extreme illiquidity with low single-digit thousands average trading volume makes it invisible to institutional investors, creating potential mispricing that could be exploited when strong leading indicators translate into record-breaking Q1 earnings that force market re-evaluation of the company's growth trajectory.

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