YB new stock pitches (Thu, Nov 4)

nLIGHT (LASR) is a defense laser specialist that has strategically pivoted from low-margin industrial welding to high-margin weapons systems, achieving its first profitable EBITDA quarter at $7.1 million in Q3. The company benefits from secular tailwinds in counter-drone technology where lasers provide cost-effective solutions compared to existing expensive alternatives, and maintains a competitive advantage as the only vertically integrated player capable of manufacturing from GaAs diode to final beam. With a $400 million backlog plus unnamed contracts, the debt-free company holds $100 million in cash for defense R&D, while the founder CEO owns approximately $30 million worth of shares, demonstrating management alignment and conservative execution of the challenging pivot from industrial welding to high-energy weapons. The bull case projects a price target of $50 by 2028 assuming 40% aerospace and defense revenue growth, 20-25% EBITDA margins (already at 10% in Q3 2025), and a 20x terminal EBITDA multiple, while the company has also secured contracts in laser sensing for missile guidance and proximity detection, expanding beyond its core weapons focus to adjacent defense applications.

Read the full article here. Read time: 1 min

D-BOX Technologies Inc. (DBO.TO) manufactures motion seats for theaters and has achieved significant growth despite a challenging theater environment, with global screen presence expanding 13.5% year-over-year to 1,084 active screens while second quarter royalty revenues hit a record $4.5 million, representing 40% year-over-year growth compared to the broader box office decline of 11.1%. The company benefits from theaters seeking higher revenue per seat during a difficult period for the industry, with D-BOX seats commanding premium pricing and higher occupancy rates than regular seats, as evidenced by Cineplex's satisfaction with their 6% D-BOX penetration rate. Key catalysts include a massive global runway with approximately 200,000 screens worldwide providing expansion opportunities, new contracts like the HOYTS deal in Australia adding 539 seats, growing non-theatrical sales, and theaters' continued focus on premium viewing experiences to generate higher revenues per patron. The company trades at a single-digit EBITDA multiple despite maintaining a net cash position and growing EBITDA, though potential risks include questions about seat viability in regions with lower ticket prices and competition from alternatives like 4DX and regional solutions such as Argentina's Lumma.

Read the full article here. Read time: 2 min

Purple Innovation (PRPL), a mattress company whose revenue is down 37% from its 2021 peak, is positioned to benefit from five rate cut tailwinds that could drive significant financial improvement. First, increased volumes are expected as approximately 30% of mattress sales occur during moves and housing market recovery from rate cuts could boost revenues by 15% or more. Second, gross margins should expand from 35% to 40% as fixed costs are spread across higher sales volumes. Third, lower rates will reduce fees paid to financing partners like Affirm for zero interest schemes, further expanding margins, though PRPL may choose to extend financing terms to gain market share. Fourth, both PRPL and Sleep Number have only floating rate debt, so rate cuts will immediately reduce interest expenses and allow refinancing at better rates. Fifth, wholesalers will increase inventories in a restocking cycle as their cost of capital falls, reinforcing revenue growth and margin expansion while giving Purple's wholesale channel through Mattress Firm and Ashley Furniture an advantage over competitors without wholesale presence. The company has organic growth opportunities through continued rollout to Mattress Firm and Ashley showrooms over the next couple years, with the author targeting a partial exit around 2027 as cyclicals require timing rather than buy-and-hold strategies.

Read the full article here. Read time: 3 min