Weekly Snack #31
Semiconductors, one of the hottest stocks on FinTwit, high cash low multiple marketing businesses and a rental company
Welcome to Weekly Snacks! This newsletter is home to a weekly compilation of new investment ideas, Twitter posts/threads, general research, and podcasts to help all investors generate ideas that they may have otherwise not been exposed to.
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Investment Pitches
TL;DR:
Our first pitch comes from Rijnberk InvestInsights and their thoughts on Taiwan Semiconductor (TSMC). Semi’s have been the buzz over the last 18 months and TSMC is one many investors have talked about. With a 1-year return of over 60%, the author goes into the Q1 update, the risks associated with China, future financials that show a contraction on margins but growth overall. They end up going over valuation, which with their numbers, implies a 17% annual return going forward from the current price.
TL;DR:
Another hot stock that’s been talked about over the years is Xpel Inc (XPEL). Luke Wolgram over at Uncommon Profits shared his updated thoughts on the company and why he believes that analysts have priced this company way too low. He goes over recent financials and rebuttals on analyst estimates while also diving into points touted by short sellers on why the company shouldn’t be priced at a premium. His analysis comes with his own 2024 financials for a base/bull case which depending on how you view your implied multiple, means the stock could be worth anywhere from $34 - $105 based on his math. It’s one to read if you’re a current investor looking for some additional clarity.
TL;DR:
I’ve had Sebastian on here from Treasure Hunting before and he recently came out with another piece on Spar Group (SGRP), a marketing services company that helps retailers increase their sales. SGRP is currently going through a sales process that will inevitably leave it with ~40% of its market cap in cash while trading at just 3.5x EV/EBITDA. He goes over the company, its financials and suggests that should the company get a re-rating to just its historical average of 6.2x, that implies an 85% upside to the stock.
TL;DR:
YoungHamilton over at Analyzing Good Businesses published his thoughts on Ashtead Group (AHT.L), the 2nd largest equipment rental company in North America. The company supports 800k+ customers and has a fleet of 1M+ rental units, which are offered in the U.S., Canada, and the U.K. Young suggests that being the #2 equipment rental company in NA benefits from scale (pricing, clients, markets) which have trickled down to the bottom line. Additionally, the company has done a lot of strategic M&A which have allowed Ashtead to really ramp up topline growth post bolt-on acquistions were completed. It’s an interesting company to take a look at if you’ve been curious about the rentail equipment space.
Tweets of the Week
General Research
Podcasts & Interviews
Appreciate you taking the time to read Weekly Snacks. I hope you have found at least some of these links to be interesting enough to dive into yourself.
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Until next week,
Paul Cerro
Thank you for the mention of our TSMC post, Paul!