YB new stock pitches (Tue, Nov 25)

Enviri Corporation (NVRI) presents an attractive opportunity following the announcement of its Clean Earth sale to Veolia for approximately $3 billion (18x 2025 EBITDA), which will generate around $15.5 per share in cash for shareholders at the midpoint of the range. The remaining company will retain two businesses: Harsco Environmental, an on-site mill services and resource recovery operation for metals producers with a 6-year average EBITDA minus CapEx of approximately $85 million, and Harsco Rail, a railway maintenance vehicle manufacturer currently loss-making due to three large fixed-price contracts signed pre-COVID but with potential for $30 million EBITDA against $5 million CapEx once these contracts are exited. After the $3.04 billion transaction proceeds are used to repay $1.34 billion in debt and pay out $1.25 billion in dividends, the NewCo will have approximately $380 million in net cash ($580 million cash minus $200 million remaining debt). Valuing Harsco Environmental at 6x EBITDA and Harsco Rail at 4x EBITDA (post-contract normalization), minus $100 million present value of overhead costs, yields approximately $1 billion in asset value, which combined with the $380 million net cash results in roughly $1.3 billion total RemainCo value or about $15 per share. The total value proposition suggests a $30 share price target, comprised of $15 in cash distribution plus $15 in residual asset value.

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MTI Wireless Edge Ltd. (MWE.L) is a 50+ year-old Israeli RF technology company operating through three business pillars: military and 5G antennas (benefiting from 8.4% CAGR military antenna market growth and global 5G expansion), smart irrigation solutions under the Mottech brand (targeting a 13.3% CAGR smart irrigation market growing from $359.65 million in 2024 to $976.6 million by 2032), and distribution/consulting services including a 60% stake in PSK Wind Technologies. The company demonstrated strong H1 2025 fundamentals with 8% revenue growth to $24.1 million, +17% EPS growth, and +66% operating cash flow, trading at 7.8x EV/EBITDA for 2025. Key opportunities include rising global defense spending, 5G network expansion (particularly in India where MTI has local presence), and increasing water scarcity driving demand for efficiency solutions, while major risks include significant geopolitical exposure due to Israeli headquarters amid ongoing conflicts, PSK subsidiary losses that have historically weighed on profitability, order dependency with sporadic large contracts, and upcoming management transitions following founder Zvi Borovitz's death and key executive departures. The company maintains a shareholder-friendly structure with founding families owning 44.3% and active share buybacks, and Allenby Capital sets a price target of 83p versus the current 40p (+108%), with the author's own 87p target (+113%) based on a fair P/E ratio of 17.

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Gaming Realms (GMR.L), a UK gaming company that develops and licenses 'Slingo' (a bingo-slot hybrid game) acquired from RealNetworks in 2015 for £12m, has generated 32% revenue and EPS CAGR over five years while trading at 6x EV/EBITDA compared to 10x industry peers. In 1H25, revenues grew 18% and adjusted EBITDA increased 30%, though UK revenues declined 13% due to new staking limits and regulations effective April 9, 2025, with management expecting UK revenues to return to previous levels by end of 2025. The company operates three revenue streams: content licensing (£23.8m in 2024, growing from £0.8m in 2017), brand licensing (£0.7m in 2024), and social publishing (£4.0m in 2024), with content licensing representing the largest portion as fees from online casinos' net revenue. Trading at £0.41 with a 52-week high of £0.57, the company maintains a net cash position of £18m, no debt, 26% ROE, and has been FCF positive every year for the past four years. The online casino market is forecast to grow 48% by 2028, and using a 10x EV/EBITDA multiple (industry median 10.1x) implies a target price of 56p, while 8x suggests 46p, both above current levels. Key risks include regulatory headwinds in the UK market, while the bull case centers on the company being a takeover candidate for larger firms like Evolution, benefiting from industry growth as more countries regulate gambling, and the defensive nature of its IP portfolio with 80+ Slingo variations creating switching costs for online casinos.

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