YB new stock pitches (Tue, Apr 21)

Global Payments (GPN), a large-cap payments company trading at $71 per share with a market cap under $20 billion, recently completed a transformational asset swap to become a more focused and scaled operator with synergy tailwinds. Despite revenues, EBITDA, and EPS all increasing over 60% from 2021 to 2026 estimates, the stock has fallen over 60% during the same period, de-rating from 25x to 5x P/E as the payments sector fell out of favor. The company is a mid-single digit organic grower expecting growth to accelerate to high single digits, with approximately 50% EBITDA margins, strong free cash flow conversion, and minimal stock-based compensation drag. GPN expects to generate $3.4 billion in levered free cash flow in 2026, $4 billion in 2027, and $5 billion in 2028, with management prioritizing $6.5 billion in buybacks across 2026-2027 while maintaining leverage below 3x. If the company delivers guided free cash flow growth and continues buybacks at the current multiple, it will trade at less than 3x free cash flow per share by 2028. Three directors have purchased $1.3 million worth of stock over the last six months at prices higher than the current share price, demonstrating insider confidence.

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Camellia PLC (CAM.L), a UK agriculture company founded in 1889 with 78,000 employees across tea, nut, avocado, and blueberry farms in Africa, India, and Brazil, trades at just 0.4x book value versus peers at over 1x and approximately £3,500 per hectare compared to a peer range of £3,000-11,000 per hectare. In 2024, the entire board and executive leadership were replaced, launching a Value Enhancement Plan that involved selling non-core assets including a 37% stake in Bermuda insurer BF&M for $100 million in June 2024, artwork for £3.7 million (37x book value), and Linton Park estate for £11 million. The company holds £86 million in net cash plus over £40 million in US Treasuries against a market cap of £125 million with 2.59 million shares outstanding, and 56% is owned by the Camellia Foundation charitable trust. The company launched a tender offer at 5,400 pence that attracted only 7.8% of shares, suggesting shareholders see higher intrinsic value, and now pays a sustainable 5% dividend yield. The catalyst is an expected May 2026 update likely to announce another tender offer at approximately 6,500 pence (representing 35% upside from current levels), with the stock potentially doubling to over 10,000 pence if it re-rates to a more conservative 0.75x book value or £6,000 per hectare valuation, though risks include generous management compensation, no current LTIP, past setbacks including a £16 million employee abuse settlement and £13 million in failed UK fruit venture write-offs, and the need for ongoing £25 million annual capex investment with returns dependent on volatile agricultural prices.

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Scandinavian Astor Group AB (ASTOR.ST), a Swedish defense microcap with a €120 million market cap, trades at a 52-week low of SEK 16.70 (down 66% from SEK 49.22) despite surging fundamentals: FY25 revenue grew 94% to SEK 433M and EBITDA jumped 297% to SEK 77.8M (18% margin), with organic growth accelerating quarterly from Q1's +30% to Q4's +51% for full-year organic growth of +42%. The company operates through three business areas (Tech, Industry, Protect) with 11 subsidiaries supplying small-calibre ammunition, precision metal for missiles, and electronic warfare gear. The order book surged 121% year-over-year to SEK 420M, with SEK 410M already booked for delivery, approximating last year's entire revenue. Sweden's 2026 defense budget increased 18% year-over-year (+SEK 26.6B), targeting GDP spending of 2.8% now rising to 3.5% by 2030, while the EU's ReArm Europe initiative mobilizes up to €800B with €150B in SAFE joint-procurement loans prioritizing ammunition and missile defense. Management targets SEK 2.5B revenue with ≥15% EBITDA margin by 2028, implying approximately SEK 375M EBITDA, which at the current EV of SEK 1.25B represents 3.3x EV/EBITDA versus peers trading at 12-17x. The company's defense components are qualified into programs lasting 15-25 years, creating a moat built through 10+ acquisitions since 2008. Upcoming catalysts include Q1 2026 results in late April and new CEO Elovsson starting May 13.

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