YB new stock pitches (Wed, Mar 11)

HireQuest, Inc. ($HQI) is a capital-light, high-margin franchise staffing business led by founder CEO Rick Hermanns who owns 38% of the company, with insiders owning 61% total and having bought over $2M in stock at prices as high as $20.32. On December 17, 2025, the company announced a $20M share repurchase plan representing ~15% of market cap or nearly 40% of the effective float, which management plans to execute immediately via a 10b5-1 plan, creating potential for significant repricing given low daily trading volume of less than $500k. The company previously pursued a transformative acquisition of TrueBlue (TBI) with four offers starting January 2025 at $7.5 per share ($330M enterprise value), which could have allowed HQI to recoup $225M through asset sales and increase EBITDA from $14M to $45-60M+ for a net outflow of just $100M, though the buyback announcement suggests this deal is now less likely but remains a 'free option.' HQI has weathered three difficult years due to a one-time workers compensation issue (resolved in Q2 2024), the poorly timed 2022 MRI acquisition which saw system-wide sales decline 24% YTD 2025, and an industry downturn exacerbated by 10 million illegal immigrants entering the US over four years while the entire staffing industry employs only 6.5M workers. The company's superior franchise model has dramatically outperformed competitors, generating $15M in adjusted EBITDA despite the downturn (down from $22M peak in 2022), having completed 10 acquisitions for net $45M that added $500M+ in system-wide sales, and previously transforming Command Center by selling branches to franchisees for $17M of the $25M purchase price while doubling profitability. Multiple catalysts suggest an industry supercycle: Trump's immigration crackdown is already creating worker shortages in construction and restaurants with TrueBlue reporting new customers seeking compliant workforces, the ASI staffing index turned positive in late September for the first time since early 2023, historical data shows industry downturns last 1-3 years, and AI-driven capex plus nearshoring should increase demand while enforcement reduces supply. Trading at ~8x free cash flow ($14M LTM), 10.5x EV/EBITDA, and offering a ~3% dividend yield at what appears to be trough earnings with 2025 consensus net income of $9M (adjusted P/E of ~12.5x after removing $2.5M in one-time non-cash adjustments), the stock offers significant value even without catalysts, while the company can draw nearly $40M from its credit facility to potentially buyback the entire effective float. Risks include franchise health (though only two non-MRI franchisees have exited in 27 years with recent closures exclusively MRI-related representing ~15% of royalties), the possibility that none of the catalysts materialize, and corporate governance concerns mitigated by management cutting executive pay 50% during 2024 revenue decline and board independence despite insiders owning interests in 67 of 399 franchises.

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Playboy (PLBY) is transitioning from an operator to a capital-light royalty model, with the licensing platform generating approximately $45 million in mostly recurring licensing revenue at 90%+ gross margin and roughly $20 million in licensing-only SG&A, resulting in approximately $20 million EBITDA before growth. The company has $133 million in net debt as of September 30, 2025, with an EV of approximately $315 million (consisting of $182 million market cap plus $133 million net debt). Q4 preliminary results implied $6.6-$7.0 million adjusted EBITDA (or $7.5-$7.9 million excluding litigation), suggesting a $30 million EBITDA run-rate. The bull case centers on the company exiting 2027 with low or no net debt through UTG cash and a potential Honey Birdette sale, with EBITDA growing at low double digits to $24-$25 million, which would value the company at approximately 8x EV/EBITDA for a higher-quality royalty model, representing +100% upside if the market rerates PLBY from a broken operator to a royalty platform. Key risks include UTG closing timing, counterparty risk, China execution, management credibility, and distortions from Honey Birdette's impact on margins and working capital plus litigation noise.

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Canada Packers (TSX:CPKR), a vertically integrated pork processor founded in 1927, was spun out from Maple Leaf Foods (TSX:MFI) in Q4/25 and has experienced non-fundamental selling pressure due to the disparity in size and liquidity between the two entities (MFI float of $1.8 billion versus CPKR's $250 million), index membership considerations, and CPKR's commodity exposure misalignment with MFI shareholders' investment styles. The stock is down approximately 14% from its public market debut with roughly 100% of its public float having turned over, creating a compelling value opportunity trading at an attractive 18% FCF yield. Despite MFI management having disparaged the pork business over the two years leading up to the spin, CPKR is on track to generate run-rate EBITDA of approximately $200 million, well above the stale circular estimate of $130 million, driven by favorable tailwinds including upside in packer margins (currently 15% below long-term averages), protein substitution from beef to pork, favorable FX and trade dynamics, and operating leverage from facilities running at 80% utilization. The company operates in a highly concentrated industry with the top five North American players accounting for approximately 70% of volume, creating a relatively disciplined market where cyclical declines in packer margins typically last only 12 to 18 months, while the raised without antibiotics (RWA) niche in which CPKR is a leader has been growing at a 5-year CAGR of approximately 15%. CPKR spun out with net debt of $386 million and leverage already approaching 2x (down from the originally communicated 3x), pays an initial dividend of $25-30 million with a payout ratio of approximately 35%, plans capital expenditures of approximately $30 million, and intends to use excess FCF to reduce leverage below 2x before exploring increased return of capital and/or small tuck-in M&A. Using a WACC of 10% and terminal EBITDA multiple of 6x, the fair value estimate is approximately $26.50 per share, with the company generating approximately $114 million of unlevered FCF or approximately $90 million on a levered basis. Key catalysts include faster than expected deleveraging, with the company potentially hitting its leverage target in 1H/26 (versus the originally communicated 12-18 month timeline), after which increased return of capital through special dividends is likely given low capital intensity and trading at an 18% FCF yield. Risks include governance concerns stemming from McCain family control (40% beneficial ownership) and potential conflicts of interest from related party transactions with MFI (which accounts for approximately 20% of CPKR's sales through an evergreen supply agreement with one-sided volume commitments and termination provisions favoring MFI), lack of transparency around royalty and licensing fees paid to MFI, potential take-private scenarios by the McCain family, and swine flu outbreaks given RWA exposure. Additional upside could come from lower cash interest costs (potentially over $10 million in savings relative to 2024 figures assuming 275 bps reduction) and lower cash taxability than the historic 27% provision suggests, neither of which are reflected in consensus estimates.

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