YB new stock pitches (Wed, Dec 17)

Utz Brands (UTZ), a gas station snack company, trades at its lowest price-to-sales ratio of 1.0x since its 2020 IPO despite revenue growing 54% from $246M to $378M quarterly and gross margins improving from 34.5% to 36%. The company is expanding into California via distributor acquisition, creating near-term M&A costs of $8M and $20M in business transformation initiatives that pressured recent earnings, but should drive market share from 1.9% to 4-6% over two years as products roll out on new distribution routes in early 2026. UTZ has gained volume share for nine consecutive quarters and outperformed salty snacks peers, with management targeting 3.0x leverage by end-2026 (down from 3.9x currently) to enable share buybacks. Capex is projected to drop from $100M annually to $60M in 2026, significantly boosting free cash flow, while insider buying occurred between $10-13 by CEO, CFO, and other executives. The stock faces headwinds from potential Ozempic/GLP-1 usage reducing snack consumption and possible EBT/SNAP reforms, but trades at a discount to its 2021 peak of 3.0x price-to-sales ratio. With 4.5% annual revenue growth and catalysts from increased free cash flow and shareholder returns, the price target is $22.15 by end-2027 (2.0x P/S), with potential acquisition by Mondelez or Frito-Lay as the Utz family retains 35% ownership through LLC units.

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Gravity Co., Ltd. (GRVY), a South Korean game developer trading at 7x P/E with $460 million in cash roughly equal to its market cap (making EV≈$0), generates 97% of revenue from the Ragnarok IP across mobile and PC platforms through both self-published games and licensed titles. The company posted strong Q3 2025 results with +8% YoY revenue growth to ₩138.9B and a 15% operating margin, while maintaining ₩609.9 billion in cash against negligible debt. Despite 29% revenue CAGR from 2016-2024 and consistent profitability, GRVY trades at extreme discount to gaming peers like CD Projekt (50x P/E), Nexon (30x P/E), and NetEase (17x P/E), likely due to IP concentration risk, corporate governance concerns under majority owner GungHo, low visibility, and foreign listing discount. The company faces a massive 2026 product lineup including the global launch of Ragnarok 3, Ragnarok M: Eternal Love 2, and multiple regional expansions, particularly targeting China market penetration which could dramatically boost revenues. Key risks include execution uncertainty on self-developed games versus previous Dream Square partnership success, potential revenue cannibalization from multiple concurrent Ragnarok titles, Western market viability challenges, and management's history of not returning cash to shareholders despite the substantial cash position providing significant downside protection.

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International Public Partnerships Limited (INPP.L) is a UK infrastructure fund holding a diverse portfolio of public and social infrastructure assets with 73% in the UK, backed by long-term, inflation-linked government contracts for transport links, electricity transmission, waste treatment, and schools that provide extremely safe and reliable cash flows with governments as counterparties. The company has experienced £290 million in writedowns over the last two years due to discount rate changes, causing its price-to-book ratio to fall from a historic 1.1x premium to 0.85x, while the weighted average discount rate sits at a historical high of 9%. This creates an opportunity to buy incredibly safe, uncorrelated 9% IRR assets at a 15% discount, with potential for rerating as either UK inflation drops (leading to lower long-term rates) or remains elevated at 3-3.5% (while current valuations only assume 2.5% long-term inflation), plus the upcoming operational launch of their largest project 'Tideway' which could drive increased investor attention through higher earnings and dividend yield. The main risk is a long-term inflation shock driving rates above the current 4.5% level, though construction risk is limited as cost overruns are typically passed to contractors, and operational risk is manageable given their experience, making this an attractive investment with limited downside due to the security of government-backed cash flows.

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