YB new stock pitches (Wed, May 27)

MNDY (considering long) has fallen 70% on AI displacement fears and now trades at 2x EV/Sales versus the 4x SAAS average, with the market pricing in approximately 90% terminal risk while the estimated actual risk is around 30%. Analysts project severe growth deceleration with 19% and 17% year-over-year revenue growth for the next two years, believing AI will displace Monday's workflow management business, fears exacerbated by a CNBC segment where MNDY was 'vibe coded in 15 minutes' using Claude. However, the thesis argues that agentic AI deployed by enterprises will require an orchestration and coordination layer for human-AI collaboration, positioning MNDY to benefit rather than suffer from AI adoption—similar to how AWS strengthened rather than killed SAAS businesses. MNDY has pivoted to a hybrid subscription plus consumption-based pricing model where vanilla MNDY uses remain at standard pricing while AI agentic usage costs extra, creating new revenue streams from existing customers who face high switching costs due to deeply embedded infrastructure requiring external platforms like movebot or developer payment for secure API transfers. An IBM paper titled 'The blueprint for agentic operations: How to build an interconnected enterprise' validates the need for workflow managers and orchestration layers, and MNDY already has agentic AI capabilities enabled in its platform with external agents like Manus able to use the workflow management system, supporting the pivot to an 'AI Operating system for enterprises.' HubSpot's CTO validated the orchestration layer thesis and purchased $1.8 million in HUBS shares based on similar reasoning, while MNDY's CEO agrees that vanilla SAAS pricing models are dead. Before pulling the trigger, the investor plans to talk to competitors about MNDY's quality, verify if enterprises will truly adopt orchestration layers, and determine which competitors (HUBS, ASAN) might gain most if orchestration layers are adopted.

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Chemring Group PLC (CHG.L) is a UK-listed defense company with over 60% of revenue from sole-source positions in strike and interceptor missiles (Patriot PAC-3, JASSM, LRASM, Tomahawk, Harpoon, SM-3, hypersonics), space (sole NASA Standard Initiator supplier for NASA, Blue Origin, ULA, SpaceX), and intelligent warfare (electronic warfare, counter-drone systems, UK Missile Defense). The Iran conflict is a significant near-term accelerant driving missile restocking, with PAC-3 production increasing from 600 units in 2025 to 2,000 by 2032 (18% CAGR), THAAD from 96 to 400 (23% CAGR), and Tomahawk from 360 to 1,000 (16% CAGR). New energetics capacity is expected to add over £85 million in revenue by FY28, while pricing and increased utilization should contribute at least £70 million more. The company projects £1 billion revenue by 2030 with mid-teens margins, though management's guidance may be conservative. Chemring's Energetics and Counter Measures orderbook has grown at a 34% CAGR since 2021, with adjusted EBIT margins forecast to reach 17.3% by 2030 versus the 13% European defense average. The company is diversifying from UK exposure (40% of FY25 revenue versus 47% in FY24) as delays in the UK Defense Investment Plan have pressured the Sensors and Intelligence segment (down 18% in FY25), though European revenue has grown from £50 million in FY22 to £120 million in FY25. Chemring trades at 24x earnings and 16x EBIT, a discount to EU, US, and US SMID-cap defense peers despite a projected 19% EPS CAGR through 2029. Bain Capital made a takeover offer at 390p in early 2025 (shares now at 480p), and Albion River has acquired an 8% stake, signaling M&A potential. Key risks include further UK budget delays, Iran conflict de-escalation reducing near-term counter measures demand (though Counter Measures saw 2.5x sales and double EBIT margins during Iraq/Afghanistan when boots were deployed on the ground), operational difficulties, or longer-than-expected facility commissioning timelines.

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TOYO Co., Ltd. (Nasdaq: TOYO) is a solar manufacturer spun out of Vietnam Sunergy Cell Co. in 2022 with 7 GW of operational capacity: 2 GW of cell production in Vietnam, 4 GW in Ethiopia, and 1 GW of module assembly in Houston, Texas. At a $558 million market cap and 7.6x TTM P/E, the company is significantly undervalued as its Houston facility alone is worth $2.05 billion, calculated by applying a 10x multiple to 2027 estimated earnings of $205 million from module operating income plus Section 45X manufacturing tax credits. Houston currently earns $70 million per year in 45X credits at $0.07 per watt for 1 GW of module capacity, scaling to $140 million when Phase 2 reaches 2 GW in Q3 2026, and expanding to $200 million annually when a planned 1.5 GW US cell plant comes online in late 2027 to early 2028 (adding $60 million at $0.04 per watt for cells). The stock trades at a steep discount due to a May 2026 anti-circumvention complaint filed by First Solar and seven other US manufacturers alleging TOYO uses Chinese wafers to route Ethiopian solar through Vietnam to evade duties, but this complaint targets only the Ethiopia-to-US export route and does not affect Houston's 45X eligibility, which is governed by separate statutes under the Inflation Reduction Act preserved by the One Big Beautiful Bill Act. In the worst case scenario where Commerce imposes circumvention duties on Ethiopia-origin cells, those 6 GW of Vietnam and Ethiopia cells can still sell to Europe, MENA, India, and ASEAN markets at lower margins, making them free optionality since Houston alone justifies the current market cap. The catalyst is expected to be the first publicly disclosed 45X transfer filing in Q2 or H2 2026, as these credits are transferable to corporate taxpayers at 5-10% discounts to face value under IRC §6418, generating near-cash flow equal to roughly 35% of the current market cap annually at full Houston ramp.

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