YB new stock pitches (Mon, May 25)

TORM plc (TRMD), a 137-year-old pure-play product tanker company with a 95-ship fleet expanding to 103 by 2028 and a $3.35 billion market cap, delivered strong Q1 2026 results with fleet-wide TCE rates of $34,937 per day (up 30% year-over-year from $26,807/day), achieving an 18% return on invested capital, driven by the Strait of Hormuz closure that disrupted approximately 15% of global oil product flows and forced a complete rerouting toward longer Atlantic Basin routes roughly double normal voyage length. While 142 MR vessels are scheduled for delivery in 2026, the effective addition to the clean pool is only 86 ships (40% less) after accounting for reduced participation of vessels aged past 20 years, supporting tight utilization alongside steady demand that reached a record 10.1 million barrels per day in early 2026. The company's fleet mix provides flexibility with LR2 vessels averaging $41,062/day, LR1 at $34,903/day, and MR at $32,946/day, while some MR vessels are chemical-capable for expanded cargo options. Aurelion Research forecasts 2026 TCE earnings of $1,440 million (up from $910 million in 2025), net profit of $655 million, and EPS of $6.48 with an 85% payout ratio yielding $5.51 per share in dividends (16.8% yield), and 2027 estimates of $1,350 million TCE earnings, $578 million net profit, and $4.84 per share in dividends (14.7% yield) as the Hormuz premium normalizes. The stock trades at 5.1x 2026E earnings and 5.8x 2027E earnings, with price targets of $51.8 (8.0x 2026E EPS) and $51.2 (9.0x 2027E EPS) implying approximately 50% upside, while trading at 1.11x NAV versus $29.75 per share NAV, a modest premium justified by current earnings power, with structural tailwinds from an aging fleet and refinery geography shifts providing a solid foundation beyond the Hormuz-related premium.

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Energy Transfer LP (ET), a midstream energy partnership, is positioned to benefit from AI-driven natural gas demand as data centers increasingly rely on natural gas for reliable, fast-deploying energy, with data center energy consumption projected to reach 1,050 terawatt-hours by 2026 and natural gas power plant costs rising 66% due to AI demand. ET recently announced agreements to provide 150 million cubic feet per day of natural gas transportation to an Arkansas data center and 150,000 MMcf/d to the Nexus Hubbard campus in central Texas, while raising 2026 adjusted EBITDA guidance to $18.2B-$18.6B due partly to rising AI infrastructure demand. The partnership trades at 7.5x-9x forward EBITDA compared to peers like Enterprise Product Partners and ONEOK at 10x-11x, offers a 7%+ distribution yield, and has a P/E ratio of 16.95 versus the broader US energy sector's 24.4, suggesting it is undervalued despite stronger EBITDA growth and greater exposure to AI energy demand. Key risks include ET's significant debt load from capital-intensive operations, the possibility that AI power demand fails to materialize as projected, and regulatory headwinds from environmental scrutiny of fossil fuels and data center construction, though the current administration favors fossil fuels and natural gas remains economically competitive. A modest rerating to align with industry peers could support a price target of $24-$27 within 12-18 months, implying 20-35% upside plus the distribution yield for 30-40% total potential return.

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Vidrala (VID.MC), a Spanish glass packaging producer listed since 1985, has evolved from a domestic manufacturer into a scaled European platform with Latin American exposure in Brazil and Chile, operating through a B2B model supplying FMCG customers under long-term contracts. The company grew revenues at an 8.4% CAGR from 2005-2025 through organic expansion and disciplined acquisitions, achieving record 30.1% EBITDA margins in 2025 despite weak demand, supported by operational efficiency, energy hedging (~85% of European needs), and high recycled glass usage. Operations span Southern Europe (48.7% of sales, 32.4% margins), UK & Ireland through integrated Encirc platform acquired in 2015 for €450-460 million (39.1% of sales, 23.5% margins), and South America led by Brazil's Vidroporto with industry-leading 42.4% margins (12.1% of sales), plus newly acquired Chile operations targeting the wine industry. The business demonstrates strong cash conversion at 65-70% FCF/EBITDA, efficient working capital with ~20-40 day cash conversion cycles, and low 0.2x net debt/EBITDA leverage following deleveraging from 1.1x in 2023, while maintaining ROIC of 11-12% and ROE/ROCE of 15-16% above cost of capital. In 2024, management sold the non-core Italian subsidiary for €230 million at 7x EV/EBITDA, distributing €123 million as extraordinary dividend and reallocating capital to higher-growth Brazil. Under new CEO Raúl Gómez (age ~50, former CFO), the company maintains shareholder-friendly policies including progressive dividends (€1.75 proposed for 2026, +15% increase), systematic 1% annual buybacks, and scrip dividend alternatives, supported by €360 million liquidity and a stable ownership base including 24.7% Delclaux family holdings. The stock trades at ~12x P/E versus 14x peer average and ~6x EV/EBITDA versus 8.5x peers, with a blended DCF (65% weight, 10% cost of capital, 1% terminal growth) and multiples valuation implying €119 fair value versus €83 current price, representing +43% upside despite structural risks including declining European beverage consumption requiring 10-12% industry capacity adjustments, energy cost volatility, and potential low-cost entrants, though consolidated market structure and disciplined capital allocation support long-term compounding.

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