YB new stock pitches (Fri, Sep 5)

Sable Offshore Corp. (SOC) presents a compelling opportunity following a panic selloff driven by fears over California's AB1448 law, which targets offshore oil expansion and specifically aims to prevent Sable's Santa Ynez Unit restart by requiring 'best available technology' for onshore oil transportation and defining 'expanded oil extraction' to include reactivation of facilities idled for more than three years. However, the law faces three strong constitutional challenges: first, the Pipeline and Hazardous Materials Safety Administration (PHMSA) maintains exclusive federal jurisdiction over interstate pipeline safety standards under 49 U.S.C. § 60104(c), preventing states from unilaterally imposing additional safety standards on interstate oil pipelines; second, the Commerce Clause protects interstate commerce from undue state burden, as oil moving from federal waters to state territory constitutes interstate commerce serving refineries that distribute products across state lines; and third, the federal Supremacy Doctrine under Article VI, Clause 2 ensures federal law takes precedence over conflicting state law, particularly regarding lawfully permitted existing federal facilities and pipelines. The federal government has previously interceded on behalf of Sable and will likely do so again, especially given the law's transparent targeting of one specific operator, though there remains a risk of potential delays in restart operations if the pipeline is not reactivated by 2026 due to further litigation around this law.

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Oppenheimer Holdings Inc. (OPY) is an investment bank trading at just 9x earnings with first half EPS of $4.60 and potential to reach $8 EPS, primarily driven by its wealth management division where AUM is market-indexed and benefits from increased market activity and volatility through its retail brokerage and sales/trading operations. The company has an extremely clean balance sheet with no debt, $68 per share in tangible book value, and trades at approximately tangible book value ($70) while peers trade at 15x-20x multiples. OPY has a low-risk business model with a stable customer base, regularly repurchases shares below tangible book value, and operates in a sector where wealth managers find it nearly impossible to lose money, offering significant upside from higher capital markets activity with limited downside risk due to minimal balance sheet exposure. While lower liquidity from high insider ownership warrants some discount, the current 9x multiple versus peers at 15x-20x appears excessive for this well-run, attractively valued business.

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Centuri Holdings (CTRI) is a North American utility infrastructure services company with over 100 years of operating history that went public in April 2024, currently trading at 10.5x 2025e EBITDA versus utility services peers at 14x despite operating a lower-risk business model with over 80% of revenue generated under long-term Master Service Agreements with blue chip utility customers averaging 20+ year relationships and nearly 100% renewal rates. Led by new growth-focused CEO Chris Brown since December 2024, the company posted record Q1 2025 bookings of $1.2 billion with a 2.2x book-to-bill ratio and $4.5 billion backlog, followed by $1.3 billion in Q2 bookings through June 23, 2025, with a sales pipeline exceeding $12 billion. The bull case centers on management's shift from a sleepy utility-owned subsidiary to aggressive growth pursuit targeting high single/low double-digit revenue growth (versus current 5% 2026 consensus) supported by increasing utility capex spend on aging infrastructure, AI-driven load growth, and grid hardening, with potential for margin improvement from current 9.5% EBITDA margins back to historical double-digit levels, leading to a potential $300 million 2026 EBITDA target. At a 12x EBITDA multiple (still below peers), this implies a $30 price target representing 50% upside, with key catalysts including Q2 earnings/guidance increase, a potential 2025 investor day, and 2026 guidance above consensus. Key risks include earnings missing elevated expectations, Southwest Gas (52% owner) selling stock too rapidly through secondaries, and increased exposure to poorly bid fixed-price projects, while the company historically achieved 8.5% organic revenue CAGR in the decade ended 2024 and operates with average work orders under $30,000 reducing project risk.

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