YB new stock pitches (Tue, Dec 2)

Transcat, Inc. (TRNS) is a healthcare distribution and service platform positioned for growth as pharmaceutical and healthcare companies accelerate capex projects and reshoring trends following pandemic supply disruptions, with major industry players announcing significant investments that should materialize over the next few years. The company has successfully replaced in-house capabilities with its offerings through a national network of highly skilled technicians who are in short supply, while its scale and strong reputation among larger clients provide competitive advantages in winning business from smaller players. Despite uncertainty in customer demand during 2025, the outlook for 2026 appears more favorable as hundreds of billions in incremental industry investments are expected to create expanding growth opportunities for this relatively underfollowed stock. Using a mid to high teens EBITDA multiple typically assigned to share gainers in attractive markets, the stock has potential to recover towards $90+ over approximately the next 12 months.

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Jumia Technologies AG (JMIA), once dubbed the failed 'Amazon of Africa,' is mounting a comeback after its stock plummeted from over $60 in February 2021 to under $2 in April 2025, with current trading around $12 and a market cap of approximately $1.3 billion. New CEO Francis Dufay, who took over in 2022, relocated operations from Dubai/Paris to Africa, shuttered unprofitable ventures like Jumia Food, and pivoted from Western-style door-to-door delivery to a pickup station model that reduces cost per order from $3.50 to $2.10 and marketing costs from $2.90 to $0.90 per order. The company is successfully competing against Chinese giants Temu and Shein in Nigeria by offering products 50-65% cheaper in key categories, enabling cash-on-delivery payments, and leveraging over 1,500 pickup stations that build local trust and credibility. Jumia added 10,000+ new sellers between October-November 2025, generated 18% more orders during 2024 Black Friday versus 2023, and projects profitability by 2027 without needing additional capital. Bull cases include favorable macro trends with Africa's stabilizing economies (Nigeria Moody's upgrade), urbanization doubling by 2050, smartphone penetration nearing 60% in urban areas, and e-commerce penetration potential growth from current 3% to double digits mirroring Latin America's rise from 2% in 2012 to 14% in 2025. Bear cases and risks include regulatory uncertainty, political instability (recent Guinea-Bissau coup), currency volatility, and the challenge of scaling sustainably while maintaining margins. Management targets becoming 'the small Mercado Libre of Africa,' referencing MELI's $100+ billion market cap trajectory.

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Furubayashi Shiko (3944.T), a Japanese packaging manufacturer founded in 1934 serving blue-chip customers like Kao, Meiji, and Ezaki Glico, trades at ¥2,283 per share with a market cap of ¥2.5 billion, representing an extremely cheap valuation of 0.27x P/B, 9x P/E (FY25 forecast), and NCAV plus investment securities of ¥3,820 per share (67% upside potential). The company has been profitable 20 of the last 21 years with only one small operating loss in 1999 over 30 years, forecasting ¥251.78 EPS for FY25, and owns significantly undervalued land including a main factory in Yokohama worth an estimated ¥2.4 billion versus ¥0.23 billion book value (10x undervaluation) and head office land in Osaka worth ¥0.82 billion versus ¥0.27 billion book value. Major risks include an overpaid 83-year-old chairman earning ¥172.9 million annually (42% of expected operating profit and 6.7% of market cap), Hikari Tsushin's exit from their 6-8% position in 2024, a flat ¥50 dividend for 16 years yielding only 2.19%, and a poison pill preventing stakes above 20%. The company previously repurchased 39% of shares between 2008-2015 but recent buybacks were offset by executive stock compensation, and with no reason for the company to remain public, a management-led buyout at a 30-50% premium represents the most realistic outcome for this low-conviction, half-basket position.

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