YB new stock pitches (Thu, Jan 11)

Proficient Auto Logistics (NASDAQ: PAL) is an auto-hauling roll-up (transporting new cars to dealerships for OEMs), created from the merger of 5 regional carriers and public since May 2024, trading sub-6x EBITDA at 1.5x leverage on what the author believes are trough numbers. The thesis combines two freight stories: the 'Yellow LTL story' and the 'truckload supply story.' First, #2 player Jack Cooper (a union carrier, ~10% of US supply) went bankrupt in March 2025—similar to Yellow's 2023 LTL collapse (7% of market, which drove 100% stock returns)—but unlike Yellow, Jack Cooper's old trucks were scrapped or sent to Mexico and won't return; this supply cut went unnoticed because Trump's 'liberation day' softened auto demand. Second, the same dynamics driving truckload stocks up 50-100% (non-domiciled CDL crackdown, English Language Proficiency enforcement, the Montgomery broker-liability case, plus drivers migrating to better-paying truckload and unprofitable carriers exiting) are now removing capacity in auto-hauling. The inflection is emerging in real time: management acknowledged on the Q1 2026 call that supply losses became evident as March/April volumes rebounded, and at a William Blair conference 4 days ago confirmed ~20% of industry capacity has come out while demand now outstrips supply, driving high-single to low-double-digit pricing increases on contract renewals—the 'holy grail of freight investing.' The all-star CEO is Rick O'Dell, former SAIA CEO since 1999 (stock 60x during his tenure) and still SAIA's Chairman. On mid-cycle (not up-cycle) numbers, with an achievable Adjusted Operating Ratio in the mid-to-high 80s, the author applies a conservative 12-15x EPS versus LTL peers (SAIA, XPO, ODFL, ARCB, TFII) at 30x and TL peers at 25x, implying 120-300% upside (a bolder $1.5 EPS x 20x = $30). Risks: an auto demand collapse, supply cuts taking longer to flow through given multi-year contracts, and near-term margin pressure from diesel pass-through lags.

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Princes Group (PRN.L) is a FTSE250 branded and customer own brand ('COB') food manufacturer (Napolina, Chicken Tonight, Mazola, Crisp'n'Dry, Mug Shot, Ragu, Naked Noodles, Plasmon, Delverde, Birkel) consistently ranked #1 or #2 across categories, with 75% of sales in the UK and meaningful European share in pasta, bread, and tinned fish. 87% owned by the Mastrolia family (via Milan-listed parent NewPrinces, NWLM), the stock has fallen 36% since its £1.16bn IPO (which raised £400m new cash) to a £739m market cap and just £569m EV. At 304p it trades at under 4x EV/EBITDA versus peers like Unilever at 11x and a sector average of 11-13x, a forward P/E of 7x (~50% discount to the sector's ~13x average), and 0.4x LTM sales (versus peers ~1.5x), appearing ~50% undervalued. A 2025 IPO reorganisation combined Symington's, Princes France SAS, Newlat GMBH, and pasta/bakery/specialty divisions, driving FY25 profit jumps with £15m of £30m targeted synergies achieved; 1Q26 showed strong revenue, EBITDA, and cash generation growth, with Italian product profits tripling and April momentum ahead year-over-year. The company is a highly efficient manufacturer with 30% capacity headroom, holds a £344m net cash warchest for further M&A, plans new product launches across H2 2026, and targets growing revenue by £1bn to £3bn with a 9% EBITDA margin (£270m) by 2028 (though brokers doubt this is achievable by 2028). It also announced a £25m buyback (~25% of the 13% free float). Risks include the recent CEO departure (CCO Mastrolia Jnr now interim CEO, recruitment underway), potential energy cost inflation (2026 energy 100% hedged, but later years exposed if oil hits $150-$200), poor sentiment, and the thin 13% float. PRN pays no dividend currently, but a future ~55p EPS at a 50% payout could imply a ~9% yield; the author favors a long position.

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Monro (MNRO) is a sleepy U.S. auto service chain becoming an activist target, with Icahn (disclosing ~14.8% in November 2025) and Gabelli (~9.4% by their March 2026 filing) owning a combined ~25% of the company. Notably, Icahn owns Pepboys, a Monro competitor and potential merger target. The board officially launched a formal strategic alternatives process on May 27, 2026, hiring advisors to evaluate asset sales, refinancing, acquisitions, operational fixes, or an outright sale to maximize shareholder value, with the usual 'early stage, no deadline' caveats. One wrinkle is a one-year poison pill adopted in late 2025 that expires November 6, 2026; while the company claims it isn't meant to block a full takeover, it caps how much more Icahn can buy in the open market. The author is long the stock and selling calls against the position into catalysts, effectively getting paid to wait while the board and activists determine whether Monro becomes a standalone fixer-upper or a sale candidate.

Read the full article here. Read time: 1 min