YB new stock pitches (Tue, Nov 18)

Conrad Industries (CNRD) reported strong Q3 2025 execution with record 9.8% EBITDA margins and $4.2 year-to-date free cash flow per share, though awards were disappointing at 0.4x book-to-bill with only $30 million awarded in Q3, offset by $47 million in contracts signed post-quarter. The company faces a massive inland barge replacement cycle ahead with a giant portion of the fleet reaching end of useful life and significantly less replacement capacity than prior cycles, plus potential benefits from Trump administration defense spending increases and record Coast Guard budgets. Strong acquisition signals emerged as family CEO Johnny Conrad was replaced by outsider Cecil Hernandez in May 2025, and change of control agreements were implemented in October 2025 for all four executives, providing severance multiples of 1.0x to 2.0x salary plus target bonus and benefit continuation, with Austal (ACA) having been a long-term suitor interested in acquiring the family-controlled business.

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Goodyear Tire (GT) trades at 0.12x price-to-sales compared to peers ranging from 0.40x-0.80x, presenting a deep value opportunity with potential for a 3x return as the author targets $25 per share from the current $7.56. The company benefits from secular tailwinds including rate cuts that will stimulate auto sales (new tires) and housing markets (20% of land freight), plus electric vehicle adoption which drives demand for twice as expensive tires that need replacement twice as fast due to EVs' heavier weight, higher torque, and need for special foam-filled tires. Despite management's mediocre turnaround strategy, GT has delivered four consecutive quarters of positive operating cash flow and successful cost cutting through their Goodyear Forward campaign, with 2026 expected to mark a return to growth. The main risk is management execution, though secular tailwinds should drive revenue growth regardless, and a multiple rerating to just 0.40x price-to-sales (still below better peers at 0.80x) would result in the $25 price target by 2027.

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D-BOX Technologies Inc. (DBO.TO), a theater technology company, trades at an ex-cash market cap of ~$140 million at 65 cents per share, representing a 6.5x forward P/E compared to IMAX's 20x+ P/E multiple. Despite Q4 royalties of $4.5 million occurring during a weak box office period with attendance down 10% year-over-year, the company has a clear path to $25+ million in annualized royalty revenue driven by normalized box office attendance, rapid system growth with record sales and large backlog, and potential pricing power increases over time. The asset-light royalty model demonstrates immense operating leverage with flat operating expenses despite growth, leading to margin expansion, while the company benefits from significant white space opportunities including absence from major U.S. theater chains and international markets. Bull cases include the upcoming strong film slate (Avatar, Odyssey), exhibitors' desperate need for premium technology to drive attendance, precedent for pricing increases from IMAX, and the tech moat within the theater ecosystem. The stock has risen 550% in the past year but maintains an attractive valuation with a target price of $1.50 per share (15x P/E) based on a path to over 10 cents per share in earnings within the next couple years.

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