YB new stock pitches (Wed, Nov 19)

US Metro Bancorp (USMT), a Southern California community bank with some Pacific Northwest presence, trades at 0.63x tangible book value despite delivering 13% annual tangible book value per share growth since 2016, maintaining a 9.1% ROE, and offering a 2.5% dividend yield. The $87 million market cap bank operates as a state-chartered community commercial bank focusing on commercial and consumer lending, deposit gathering through branches and loan production offices, and related fee services, earning from net interest margin and noninterest income with a 66.2% efficiency ratio. Due to its small scale, the bank emphasizes local commercial relationships, and despite appearing to be an underappreciated compounder, it trades at a meaningful discount to tangible book value, potentially offering shareholders a mid-teens IRR if current performance continues.

Read the full article here. Read time: 1 min

TalkPool AG (TALK.ST), a telecom services company, has cleaned up operations by exiting unprofitable countries and shutting down its money-losing IoT segment, positioning the now-profitable business for growth with management guiding for €40 million revenue by 2030 (17% CAGR) and 14% EBITDA margins, yet trades at a single-digit P/E despite the German business alone being externally valued at €20.5 million versus the company's €7.7 million market cap. The company operates three segments: traditional field services providing physical maintenance and repairs which will grow slowly; remote services leveraging a Pakistani team at €4/hour versus €45/hour in Europe/US that is expanding internationally to Indonesia, Saudi Arabia and Western markets with expected growth above 22.6% annually after recent Pakistan contracts increased sales volume by 40%; and technology services including solar-powered security cameras, AI monitoring, batteries, energy management and drone inspections, currently generating only €100k revenue but expected to comprise 25% of total revenue by 2030. A new Nokia partnership represents a multi-million-dollar opportunity starting with a $100k rollout across all Nokia US sites for measurements and analytics, with much work performed offshore at Pakistani wage levels, which management considers just the beginning of a potentially very large relationship. The company reported solid Q3 results with 13.8% EBITDA margins despite elevated growth investment costs, expects acceleration in Q4 and early 2026, won't pay dividends until COVID loan matures in 2027, resolved tax transfer issues between German and Swiss operations, and management noted potential acquisition opportunities ahead while focusing on organic growth for now.

Read the full article here. Read time: 4 min

Perdoceo Education Corporation (PRDO), a ~$2B market cap for-profit education company, has experienced unprecedented 200% stock growth driven by enrollment surges that management attributed to AI recruiting and operational improvements, but this growth coincides with widespread 'ghost student' fraud where criminal networks use stolen identities to enroll fake students and extract federal financial aid through Pell Grants and loans. The company's main institutions Colorado Technical University (CTU) and American InterContinental University System (AIUS) lacked basic verification controls, allowing even cartoon character names like 'Spongebob Squarepants' to successfully enroll and access federal aid applications. Industry experts estimate 5-15% of for-profit education enrollments are ghost students, which would represent ~8% of PRDO's revenue and ~34% of operating income, with third-party estimates suggesting up to 31% of California community college applicants and 20% nationally are fraudulent. The Department of Education launched Phase II verification measures in Q4'25 requiring government ID verification for all FAFSA applicants, effectively ending the easy fraud opportunity, while peers are already reporting enrollment softness and marketing execution issues. PRDO management has sold $44M worth of stock (48% of holdings) over the past twelve months, and the company faces additional headwinds including potential loss of Title IV funding due to cohort default rates above 40%, increased competition from traditional universities cutting tuition by up to 40%, and regulatory scrutiny under the OBBB Act. With ghost students comprising an estimated 10% of enrollments at the midpoint and operating margins likely to compress from 24% to 17% as fraud disappears, analysts project approximately 20% earnings decline in 2026, leading to a price target of $14-16 versus the current $32, representing 48-55% downside based on historical 8x P/E multiples.

Read the full article here. Read time: 20 min