YB new stock pitches (Thu, Sep 10)

On Holding is a premium footwear brand — shoes remain 92% of sales — with a young apparel and accessories business that is an option rather than a second leg today. The thesis combines footwear’s six-to-twelve-month replacement cycle with rising direct-to-consumer ownership, full-price discipline, 30% global aided awareness and founders returning to operational control. Q2 constant-currency sales grew 21.6%, DTC rose 34.3% to 45.7% of sales, and gross margin reached an industry-leading 65.4%; the company also has CHF 1.2B of cash and no financial debt. The shares fell 22% after a sales miss and lower constant-currency guidance as On limited wholesale shipments to protect channel inventory and pricing, although softer US sell-through is real. At $27.99, the stock trades at roughly 19x estimated owner earnings. Assuming owner EPS reaches about $2.05 by 2029 and a 23x fair P/E, value is approximately $47, implying ~19% annual returns. The central risk is prolonged US weakness or competitor promotions forcing a choice between volume and price discipline.

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Light & Wonder was increased to approximately a 10% position around the low $70s after falling from roughly $120 on weak market-share data. Investors interpreted the decline as structural competitive deterioration, but the weakness is viewed primarily as a temporary, identifiable product-cycle issue: Aristocrat launched a strong slate in the first half of 2026, while Light & Wonder’s new products are weighted toward the second half. As those products reach casino floors, market-share data is expected to improve and change investor perceptions. The position size also reflects a disconnect between normalized earnings power and the current valuation, with approximately 50% upside to the nearer-term price target and roughly 100% to the following year’s target, alongside high confidence in execution. The key test is whether the second-half 2026 slate produces the anticipated market-share reversal rather than validating concerns about lasting competitive deterioration.

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Jersey Mike’s has grown rapidly, but its recent IPO appears priced for perfection as historical growth could moderate. Units increased from 1,048 in 2015 to more than 3,250 in 2025, systemwide sales exceeded $4.2B, AUVs surpassed $1.35M, same-store sales have remained positive for roughly 20 years, and adjusted EBITDA margins topped 45%. However, much of that success may have come from Subway’s decline, a benefit that could be largely played out. Blackstone owned the company for only about 18 months before the IPO, increased debt to $2.1B and more than doubled annual interest expense, while receiving roughly $1.16B before the offering and another $605M in gross IPO proceeds. The UP-C structure, tax receivable agreement, supermajority voting control and potential ~$250M founder earnout favor pre-IPO holders. Canada and U.K./Ireland master-franchise agreements remain high-margin contributors but carry caveats that may not be fully reflected.

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