YB new stock pitches (Mon, May 26)

Mission Bancorp (MSBC), a California community bank focused on serving small and mid-sized businesses in the Central Valley, Central Coast, and Southern California, has grown EPS by 19% annually over the past five years and 28% over the past decade, driven by 17% annual loan growth. The bank demonstrates strong financial metrics with a 6.1% loan yield, minimal non-performing assets of 0.03%, a 4.3% net interest margin, an impressive 45% efficiency ratio (below the industry average of 59%), and a 17% return on equity. Management, who owns 53% of the company, has successfully expanded by hiring local banking teams from larger banks and has four growth levers: expansion into new markets, adding new services like 1031 exchanges, increasing efficiency, and share repurchases. With current earnings of $11.54 per share and trading at just 8.2x earnings, MSBC has a price target of $173 (82% upside) based on a 15x multiple, with a five-year bull case of $400 per share (35% IRR) assuming continued 17% earnings growth. Key risks include slower-than-expected loan growth and higher-than-anticipated efficiency ratios.

Read the full article here. Read time: 6 min

Azkoyen (AZK.MC), a Spanish small-cap (€178M) specializing in vending machines, payment systems, and security solutions, trades at attractive multiples of 8x P/E and 6x EV/EBITDA compared to industry averages of 15x. The company has demonstrated consistent growth with a 5.05% revenue CAGR (2013-2024), 10% annual operating income growth, and maintains healthy 15.2% EBITDA margins and a ROIC exceeding 12%. With 85% of revenue generated internationally across 95+ countries and 10 production plants, Azkoyen benefits from economies of scale and vertical integration. The company maintains a conservative financial position with low debt (0.3x EBITDA) and strong free cash flow generation (€33M in 2024). Risks include currency fluctuations, potential economic downturns in key European markets, operational challenges from global supply chains, inventory management, M&A execution, and limited stock liquidity. Based on DCF and relative valuation methods, with greater weight given to DCF, the target price is €10.85, representing over 35% upside from current levels. The company's undervaluation stems from its small-cap status, limited sector appeal, and low liquidity, despite its strong fundamentals and family ownership structure.

Read the full article here. Read time: 11 min

Hydreight Technologies Inc. (NURS.V), evolving from 'Uber for nurses' to 'Shopify for healthcare,' operates three verticals: Nurse Network, Franchise Solutions, and the newly launched VSDHOne (D2C platform in 3Q24). Ranked as the 9th fastest-growing TMT company in Canada by Deloitte, the stock trades cheaply due to its complex business model, Victory Square's majority ownership (which some investors distrust due to alleged past overpromising), low float, and minimal marketing spend. NURS generates revenue through subscription/licensing fees ($5,200 annually for nurses, location-based fees for franchises, $200 per state monthly for VSDHOne), plus ~20% margins on pharmacy orders and 10% service commissions. The company recently raised over $5 million through a LIFE offering at $1.55 per share, providing a strong cash position. Despite a 4Q24 revenue dip due to Hurricane Helene's impact on IV bag supplies, management expects substantial growth acceleration starting in 2025, particularly from the VSDHOne platform, which enables companies to launch telehealth services across all 50 states in days rather than months or years by leveraging NURS's regulatory compliance infrastructure, doctor network, and pharmacy distribution.

Read the full article here. Read time: 6 min