YB new stock pitches (Thu, Dec 11)

Sanara MedTech (SMTI) trades at less than 2x EV/Sales, its lowest valuation since IPO, despite having 90%+ gross margins and being the category leader in hydrolyzed collagen with CellerateRX generating ~80% of revenue at $700-800 ASP and only 5% market penetration versus 2 million addressable high-risk surgeries annually. The company discontinued its cash-burning THP division that lost $7+ million yearly with no revenue, issued weak Q4 guidance expecting high single-digit to low-teen growth (compared to 49% in Q4 2024), and faces tougher comparisons, causing the stock to drop 30% from $30 to $20 despite the surgical business growing from $24M to $102M revenue with EBITDA turning positive to $16M TTM. Growth catalysts include BIASURGE (launched 2023, estimated $4.4-8.8M revenue with cross-selling potential), OsStic launching Q1 2027 with $2,500 pricing targeting 100,000 annual periarticular fractures, expanding from 1,400 to 4,000 approved hospitals, increasing distributor agreements from 300+ to 400+, and penetrating adjacent surgeries beyond ortho/spine. The company expects 15%+ growth with operating leverage from scalable SG&A structure, plans to refinance $45M debt at 13.5% interest, and trades at significant discount to peers like ACell (acquired at 4x EV/Sales) and Acera Surgical (8-9.25x EV/Sales). Key risks include growth stalling due to law of large numbers, BIASURGE failing to gain traction, OsStic launch delays, while catalysts include clean quarters without THP expenses starting Q1, stronger growth rates, OsStic launch, debt refinancing, and potential institutional discovery.

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Nerdy Inc. (NRDY), a tutoring company led by non-technical founder and CEO Chuck Cohn, is positioned to benefit from a potential AI narrative shift in 2026 as markets may refocus on AI implementation and use cases rather than just infrastructure buildout. Despite concerns that AI could replace human tutors, Carnegie Mellon research shows that AI-assisted human tutors outperform purely AI tutors, supporting Nerdy's core Varsity Tutors business model. Cohn claims the company is undergoing a complete AI-driven transformation, targeting 100% of traffic on new AI-written codebases by November, which has already delivered approximately 50% reduction in audio/video error rates and nearly 40% cost savings per session. The CEO has dramatically increased his stake from 19 million to 56 million shares (15% to 45% ownership) by purchasing 37 million shares at higher prices than current levels, demonstrating strong conviction in his AI strategy. Nerdy's competitive advantage lies in long-term contracts with school systems that provide direct access to parents and students needing tutoring services. The company targets 22% annual revenue growth, 70% gross margins, and is reducing SG&A by approximately $25 million annually, with a price target of $14.71 by 2028 representing potential 7x returns based on an estimated $1.8 billion market capitalization and $100 million net income, contingent on Nerdy becoming the AI winner in the tutoring space.

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Gibraltar Industries (ROCK) is a building-products company undergoing strategic portfolio transformation, trading at 6.7x 2026E EV/EBITDA versus peers at 9-11x, with a price target of $85 (+29% upside) at 9x multiple or $100 (+54% upside) at 11x. The company is divesting its underperforming Renewables segment for expected proceeds of $160-215 million (conservatively $185 million) by year-end 2025, allowing focus on higher-margin Residential and AgTech segments. The Residential segment (71% of FY25 sales) is driven by fast-growing metal roofing business expanding through Direct-to-Contractor model and recent $90 million acquisitions, despite softness in Mail & Package due to housing cycle delays. The AgTech segment serves the rapidly expanding Controlled Environment Agriculture market (growing 9% annually through 2028) with backlog surging +226% in Q1 and +71% in Q2, totaling $298 million, positioning for sharp revenue inflection beginning 2026. Management forecasts FY26 EPS of $5.24 (8% earnings yield) with EBITDA margins expanding to ~20% by 2027 from current levels, supported by metal roofing market share gains, CEA market growth, and the $120 million Lane Supply acquisition contributing $112 million in sales at 14.8% margins. The company maintains strong balance sheet with $43 million cash, no debt, and expects to finish FY25 with ~$320 million cash including divestiture proceeds and $94 million projected free cash flow. Key catalysts include the Renewables divestiture completion, AgTech momentum from strong backlog, and margin expansion reaching mid-cycle target of 25%. Main risks include USDA funding delays at Houweling project, persistent macro/rate headwinds affecting Mail & Package, tariff/policy uncertainty, and potential 2026 EBITDA shortfall, though even flat EBITDA implies ~$61 per share value with attractive 3.9x risk/reward profile.

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