YB new stock pitches (Wed, Oct 29)

Q.E.P. Co., Inc. (QEPC), a Boca Raton-based flooring installation tools manufacturer, has completed a successful turnaround by divesting its low-margin flooring business and refocusing on its profitable core tools, adhesives, and underlayments segment. The company sold its Harris Flooring Group assets in September 2023, U.K. business in October 2023, Australia and New Zealand operations in March 2024, and PRCI in France in March 2025, dramatically improving profitability with operating margins expanding from 3% to over 8% and achieving all-time high operating income despite lower revenue. QEPC now trades at attractive valuations of 7.7x P/E versus an 11.3x industry average and 5.2x EV/EBITDA compared to peers like Stanley Black & Decker at 11.9x and private market deals at 12-13x. The company maintains a debt-free balance sheet with cash representing 28% of its market cap, has introduced a new $0.20 quarterly dividend in 2025, and continues share buybacks under its repurchase program. The primary risk is customer concentration, with Home Depot representing 66% of FY2025 revenue, though this 40+ year partnership provides stability. Additional risks include high insider ownership with the Gould family controlling 49% of shares and potential capital misdeployment, though management appears more disciplined following the turnaround.

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Intellia Therapeutics (NTLA) is facing a critical safety crisis as both lead programs (HAE and ATTR) have experienced Grade 4 liver events, with the latest also showing elevated bilirubin, meeting Hy's law criteria which indicates severe drug-induced liver injury. The company should halt these programs immediately since both HAE and ATTR already have multiple safe and highly efficacious treatment alternatives, making the unacceptable risk/benefit profile potentially fatal for patients if the drugs somehow gain FDA approval. With over $261M in operating expenses for the first half of 2025, approximately $500M in remaining cash, and 107.3M shares outstanding, the company's cash value is approximately $4.66 per share, expected to drop to the $3s by year-end. NTLA has no advanced-stage replacement candidates for these now-terminated lead programs, yet the stock has surged over 120% since June despite this extremely negative development, presenting a significant shorting opportunity as the stock is destined for single digits regardless of any upcoming efficacy data updates.

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UCA AG (UCA1.F) is a German investment and incubator company focused on MedTech, care, SaaS, and IT services, trading at €41 with a price target of €94.9 (+131%) over three years. The company maintains a 98% equity ratio, €5.4 million liquidity, and delivered 2024 EPS of €4.55 with dividends of €4.50 yielding over 10%. Key holdings include Pflegia GmbH (57.5%), a reverse recruiting platform for nurses with over 40,000 jobs, 500,000 nurses, and 8,000 employers where employers only pay upon successful placement, along with MedLearning AG (78%) serving 95,000 doctors with 330 courses, and stakes in Comdesk Group, Swissphone, Pflegehelden, and Lovehoney Group. The investment thesis centers on Pflegia's potential to become the dominant player in nursing recruitment amid skilled worker shortages, with catalysts including user growth scaling, potential IPOs or strategic sales of portfolio companies, continued high dividend policy, and the company's strong financial position enabling new investments. Risks include stock illiquidity (only 35% free float of 662,000 shares), dependence on exits, low transparency with minimal analyst coverage, and early-stage investment default risks. The author calculates a fair P/E ratio of 20.3 versus current lower levels, targeting investors willing to accept asymmetrical risk-reward profiles in this specialized German SME niche investment vehicle.

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