YB new stock pitches (Wed, Nov 5)

Wendy's (WEN), a fast-food chain with 2.5% US market share, is trading at a historical trough valuation of approximately 7.7x EV/EBITDA compared to an 18x industry average, following a 50% dividend cut and overleveraging issues that have created elevated risk with $4.1 billion in net debt. The company faces broad-based consumer weakness with interim CEO Ken Cook noting the fastest declining consumer sentiment in his career, and new management has acknowledged failures while providing extremely negative downward guidance for the second half with expectations to return to positive growth in 2026. Despite these challenges, Wendy's presents a potential turnaround opportunity trading at historical multiple troughs with very low investor expectations heading into Q3 earnings, tax loss selling pressure creating additional downside, and the company having bought back 6.5% of shares outstanding in 2025. The risk-reward profile appears attractive given the iconic brand recognition, international presence, extremely negative sentiment already priced in, and potential for management-driven improvement similar to other fast-food turnaround stories like Starbucks, though the elevated leverage makes it both riskier and potentially more rewarding should micro and macro factors improve.

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Yatra Online, Inc. (YTRA) is trading at $1.45 and is expected to enter the final phase before the U.S. ticker is retired and shareholders are converted into Indian-listed equity. Based on Yatra India's current market capitalization of approximately $277 million and with U.S. investors collectively owning around 65%, the implied fair value for the U.S. shares is roughly $2.85. Upon announcement of the conversion, the U.S. stock is expected to initially trade at a 10-15% discount to the Indian equivalent, implying a price range of $2.42-$2.57, which represents a potential 70% overnight revaluation from current levels at the midpoint.

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Magnera Corporation (MAGN), formed from the 2024 merger of Glatfelter and Berry Global's Health, Hygiene & Specialties business, is the global leader in nonwoven materials used in products like diapers and wipes, currently trading at trough multiples of 5.4x EV/EBITDA versus historical ranges of 6-9x and peer Mativ at 7.5x. The company's margins are at all-time lows of approximately 7% EBITDA due to COVID-induced oversupply primarily from Chinese producers that pushed global utilization below 60% versus normalized 85%, compared to pre-COVID combined margins of 10-12% for the predecessor companies. Management expects supply-demand normalization by 2027-2028, guiding to $370 million adjusted EBITDA and $85 million adjusted free cash flow for 2025, with projected margin recovery to 10-12% by 2028 supported by $55 million in merger synergies and strategic capacity reductions including a South American plant shutdown. The company carries high leverage at 7.5x net debt-to-EBITDA but debt is termed out to 2029/2031 with a 7.2% weighted average interest rate, and the stock has faced forced selling from Berry Global's spin-off distribution to shareholders with mandate constraints. Key risks include Chinese competition taking market share and potential failure to pass through input cost increases, though management has improved cost pass-through from 30% to 60% of raw materials since 2021, and assuming 3% revenue growth, normalized margins, 3x net leverage, and 6x EV/EBITDA multiple, the author estimates fair value at $40 per share by 2028 versus the current $9 price.

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