YB new stock pitches (Thu, Nov 20)

RideNow Group (RDNW), a 56-location powersports dealership trading at 0.18x price-to-sales versus a historical peak of 0.4x, presents a compelling turnaround opportunity as the cycle turns positive with unit volumes up 2% year-over-year and operating income up 75%. The company, formerly RumbleOn, underwent dramatic restructuring when RideNow founders led an activist campaign to regain control after revenue plummeted from a $1.6 billion peak to $1.1 billion TTM during the rate hiking cycle. RDNW benefits from high-margin revenue streams including parts and service (35% of gross profit), insurance and financing origination (33% of gross profit), and previously strong vehicle transportation services that declined from 24,000 transports to 1,400 due to key employee departures. The dealership model leverages floor plan financing with 30-90 day grace periods, meaning interest expense evaporates when inventory turns over four times annually at cycle peaks. With $220 million in debt outside floor plan financing, a $200 million market cap, and 2022 operating income of $75 million indicating peak profitability potential, RDNW trades at less than 3x peak earnings ahead of the interest rate cutting cycle. The price target of $17.13 from $5.30 assumes a return to peak $1.6 billion revenue levels and 0.4x price-to-sales multiple, though risks include lack of exclusive regional monopolies unlike competitor Alta Equipment Group (ALTG), potential software platform atrophy, and the need to rebuild the transportation services sales team.

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SiS Distribution (SIS.BK), Thailand's second largest IT distributor, trades at only 8.5x earnings despite generating 20% returns on equity and steadily shifting its business mix toward faster-growing, higher-margin segments. While competitors like Synnex Thailand operate on razor-thin margins (EBITDA below 2%, net profit margins of 1.5%), SiS generates EBITDA margins of roughly 4% and net profit margins of 2.5%, enabling higher absolute profits despite having one-third less revenue. The company operates across five segments, with traditional consumer products, smartphones, and commercial products generating low margins (3-6% gross margins) and flat revenues, while value-add products and other segments (including cloud services, security, smart home) generate high-teens gross margins and have grown at 20% annually over the past six years. With cloud spending in Thailand expected to grow at 20% CAGR, cybersecurity at 12% CAGR, and smart home at 30% CAGR, SiS's portfolio shift toward these higher-margin areas should drive blended margin expansion, as evidenced by fast-growth divisions contributing 1,199m in gross profit in 2024 versus 447m in 2018. The company currently generates nearly 900m THB in owner earnings with a 5%+ dividend yield, and assuming continued growth in fast-growth divisions, FCF could exceed 1.2bn THB within five years, potentially resulting in a market cap of 15-20bn THB (2-3x upside from current prices). Additional catalysts include potential acquisition interest given management succession at parent company SiS International, whose 60% stake in SiS Distribution alone is worth 1.1bn HKD—more than 2x SiS International's own market cap. The main risk is SiS's inability to grow in higher-margin segments, which would result in positive but mediocre returns.

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Delcath Systems (DCTH), trading at $8.61 per share with a $304 million market cap, has developed the FDA-approved Hepzato Kit that delivers high-dose melphalan chemotherapy directly to the liver while filtering blood to minimize systemic exposure, currently approved for metastatic uveal melanoma with liver-dominant disease (mUM) where it achieved a 36.3% objective response rate, 14-month median duration of response, and 20.5-month median overall survival in the FOCUS study. The company posted explosive commercial growth with Q3 2025 revenue of $20.6 million (up 84% year-over-year), 87% gross margins, positive $0.8 million net income, $5.3 million adjusted EBITDA, and guides for $83-85 million in full-year 2025 revenue (implying ~150% volume growth), while maintaining a strong balance sheet with $88.9 million cash and no debt across 25 active U.S. treatment centers. Key catalysts include the ongoing global Phase 2 colorectal cancer liver metastases trial that dosed its first patient in August 2025 targeting ~90 patients, a Phase 2 metastatic breast cancer study, continued U.S. center onboarding and payer coverage expansion through late 2025, and enrollment progress updates from both trials in 2026. Risk factors include uncertain clinical expansion success in larger cancers, potential commercial execution challenges with center adoption and payer alignment, evolving regulatory pathways for future indications, and competition from immunotherapies and liver-directed radiotherapies. The risk-weighted valuation scenarios range from $6.80-7.70 per share (30% probability of slower execution), $14-16 per share (50% probability of solid commercial and clinical progress), to $22-25 per share (20% probability of multi-indication platform breakout), yielding a risk-weighted expected value of $14.36 per share representing approximately 67% upside from current levels.

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