YB new stock pitches (Tue, Sep 16)

Elevance Health (ELV), the second-largest US health insurer with a $69 billion market cap serving 46 million members, trades at 9.3x earnings versus its historical average and just one-third of the S&P 500's multiple, down 40% after slashing guidance in July. The company generates $6.2 billion in average three-year free cash flow (9% yield on equity) and operates in an oligopoly as an independent Blue Cross Blue Shield licensee in 14 states with dominant market positions including 67% share in Kentucky and 56% in Indiana. ELV produced a 30.9% return on tangible equity last year with a strong balance sheet including $8.6 billion cash, $25.3 billion in fixed maturity securities, 40.77% total debt to capital ratio, and 1.3x net debt to EBITDA. Legendary value investor Seth Klarman's Baupost Capital bought 616,000 shares worth $239.6 million (5.82% of their $4.1 billion portfolio), while CEO Gail Boudreaux purchased $2.4 million of stock at $286.94. The company's commercial segment alone, which generated $47 billion in premiums with an estimated 8% margin ($3.8 billion operating income), trades at 16.1x operating income excluding $2 billion in investment income, and management has reduced share count by 8.5% over 42 months with $8 billion remaining on current buyback authorization. Key risks include Q2 health benefits income falling 27.3% year-over-year and pressure on Medicare and Medicaid businesses from regulatory changes, though management remains confident in long-term earnings power and believes the current share price doesn't reflect the company's intrinsic value.

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Digital Network SA (WSE:DIG), formerly 4fun Media SA, is a Polish digital out-of-home advertising leader operating over 20,000 LED screens through subsidiary Screen Network SA that reach approximately 6.5 million consumers daily. The company transformed from a struggling TV operator that saw revenue collapse 44% to PLN 34 million in 2019 into a profitable DOOH market leader, with revenue recovering dramatically from PLN 26 million in 2020 to PLN 75 million in 2024 representing a 16.39% year-over-year increase. The company now maintains strong profitability with 34.7% net margins in 2024 and operating income that grew from PLN 3.0 million in 2020 to PLN 25.2 million in 2023, offering programmatic advertising solutions, content management, and digital advertising screens in high-traffic locations. While the stock has already re-rated significantly as the market recognized this transformation, it could potentially gain another 30% from current levels or alternatively go to zero, representing a high-risk, high-reward investment opportunity in Poland's growing digital media consumption market.

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Intrepid Potash (IPI) trades at $29.13 with a market cap of $388 million and 0.78x price-to-book versus historical ratios of 1.5x-3.5x during potash booms, representing the only 100% US-domiciled potash producer in a market dominated by Canada, Russia, Belarus, and China. The company produces 300,000 tons of potash annually and 230,000 tons of premium langbeinite (branded as Trio) that sells for $400/ton versus potash at $356/ton (down from $1,200 peak in 2022), generating current revenues of approximately $100 million that could reach $530 million during the next boom when potash hits $1,000/ton, potentially delivering $400 million in bottom-line profit. IPI is debt-free with $6.50/share in cash and owns 22,000 acres in the Permian Basin, having received $50 million from Exxon in 2024 with another $50 million due when drilling begins, plus future profit-sharing arrangements, with the land potentially worth $17,000-$30,000/acre based on recent Permian sales. The company shows negative GAAP net income due to non-cash asset impairments from low potash prices, with commodity forecasts suggesting undersupply around 2028, though timing remains uncertain as agricultural cycles depend on weather and crop failures. Price targets are $60 for a brief potash boom and $135 for a prolonged boom, with risks including continued weak agricultural demand, uncertain timing of commodity cycles, lack of insider buying since 2019, and management's history of growing production rather than implementing shareholder-friendly policies like buybacks.

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