Growth Stock Thoughts
An Investment in Knowledge Pays the Best Interest
Benjamin Franklin
Ring Energy Eyes Production Expansion Over the Medium Term
• Production increased 11.5% for the first 9 months of 2024, though a lower pricing environment had sales up 8.3% over the same period.
• Targeting leverage ratio of 1.0x debt to adjusted EBITDA, currently 1.59x.
• After REI reaches its target leverage, we expect management to ramp organic production or engage in another acquisition.
• Based on transactions of similar asset profiles, REI could be worth $2.44/share in private market value.
MYTE Looks to Expand Luxury Offering Breadth Through YNAP Acquisition
• MYT Netherlands Parent (MYTE), operating Mytheresa, will acquire Yoox-Net-a-Porter (YNAP) from Richemont and rebrand as LuxExperience.
• The combined entity is expected to reach $3.2 billion in gross merchandise value in 2025, with ambitions to grow into a $4 billion gross merchandise value luxury e-commerce giant by 2030.
• Richemont will provide MYTE with a $106 million working capital facility and YNAP’s $590 million in cash, while MYTE issues 43 million new shares to Richemont.
• The luxury e-commerce market is expected to double to $180 billion by 2030, with the total luxury market growing at 3-7% annually.
• YNAP generates 45% of revenue from North America, offering MYTE an opportunity to accelerate US growth.
Solar Stocks to Brighten Your Portfolio: Canadian Solar (CSIQ) and First Solar (FSLR)
CSIQ:
• Trading at far less than the sum of its parts, with Recurrent Energy and CSI Solar combined being worth $87.26 per CSIQ share.
ion to enhance recurring revenues.
• The global push toward renewable energy is secular and likely to accelerate as AI-driven datacenter demand rises.
• Onshoring more of the manufacturing base to the US will mitigate tariff risks in both batteries and solar.
FSLR:
• Growing manufacturing base to 25GW by 2026, with 14GW in the US. Fully integrated supply chain independent of Chinese supply mitigates most tariff risks.
• Sell-off driven by fears of loss of IRA tax credits, however, FSLR remains profitable without the credits and its unlikely they will be repealed in their entirety.
• Largest US solar manufacturer and #10 in the world by market share.
First Solar Shines Through Cloudy Market
• Growing manufacturing base to 25GW by 2026, with 14GW in the US. Fully integrated supply chain independent of Chinese supply mitigates most tariff risks.
• Sell-off driven by fears of loss of IRA tax credits, however, FSLR remains profitable without the credits and its unlikely they will be repealed in their entirety.
• Largest US solar manufacturer and #10 in the world by market share.
• FSLR’s 17 TOPCon patents might yield a third-party sale or royalties, as the U.S. International Trade Commission looks into banning infringing imports and the Chinese government upheld FSLR’s ownership.
• FSLR’s CdTe modules have higher temperature tolerance and lower annual degradation rates compared to Chinese-dominated c-Si modules.
Onshoring Brightens Canadian Solar’s Future
• Trading at far less than the sum of its parts, with Recurrent Energy and CSI Solar combined being worth $87.26 per CSIQ share.
• Sold 20% of utility-scale project manager to Blackrock, repositioning it to begin operating battery-storage and solar-generation to enhance recurring revenues.
• The global push toward renewable energy is secular and likely to accelerate as AI-driven datacenter demand rises.
• Onshoring more of the manufacturing base to the US will mitigate tariff risks in both batteries and solar.
• CSI Solar has shipped over 22 GW of solar components year to date, making it the #5 spot in global market share.
StoneCo’s Elevated Take-Rate Yields $350 Million Buyback
• Recently announced $350 million repurchase agreement, representing more than 10% of shares.
• Despite pressure from low-cost payment architectures, STNE has been able to maintain a high take-rate thanks to value-added services.
• Management indicated it may sell off the software arm to run a more lean and transparent business.
• Obtained banking license in early 2024, allowing it access to cheaper funding and increases the stickiness of the business model.
• Brazil has a fragmented payments industry with ample cross-selling opportunities.
Fidelity National Financial has Strong and Safe Dividend Despite Housing Market
• 3.3% Dividend Yield recently announced 4% dividend increase.
• Expects robust housing recovery in 2026, betting on a similar timeline for commercial real estate.
• #1 market share in the US for title insurance, in both agency and direct sales.
• F&G has secular tailwind in life and annuity from aging population.
• Despite downturn in housing market, FNF grew revenues by 8% over the first 9 months of 2024.
Total Energies Has Strong Free Cash Backed By High Yielding Growth Profile
• 5.3% Dividend Yield with 5% dividend growth.
• Strong long-term production profile, expecting a 4% CAGR output increase to 2030 with breakeven below $30/boe (barrel of oil equivalent).
• Long-term focus on LNGs (Liquified Natural Gas), expecting to grow export capacity by more than 50% by 2030, with 6 Mt/y (million tons per year) in long-term supply contracts signed with Asian importers.
• Trades at an attractive valuation at just 7.8x earnings.
• Committed to $2 billion in buybacks each quarter of 2025.
Global Payments Slims Down with SMB Focus
• Committed to repurchasing 2.3% of shares within the next quarter, on top of a modest 1.0% dividend.
• Strong presence in the SMB (Small-medium business) space, consolidating its 16 brands into one coherent entity.
• #1 commercial card processor in the US, processing more than 35 billion transactions annually across 830 million accounts.
• 70% attachment rate for new offerings to existing customers.
TDK’s Tech Surge Sparks Free Cash Potential
• TDK is leader in small solid state batteries and announced supply agreement with Apple
• Growth areas in wearables, phones, IoT (Internet of Things) and EVs (Electric Vehicles)
• Dominant market share in several areas, including in smartphone battery components, holding the #1 market share of 50-60%.
• Strong manufacturing and materials science expertise, first to bring silicon anode batteries to market in 2023.
• Targeting late-stage development products for M&A.
• Aggressive capital efficiency plan, potentially divesting business units that do not meet the 10% ROIC watermark.
Oshkosh’s Stable Dividend Driven by Long-Term Contract Wins
• 1.8% dividend yield.
• Secular tailwind from municipal underspending and defense rearmament.
• Revenue forecasted to grow 10.8% in 2024, driven by increased demand in the vocational segment.
• Expanding access business into Europe, trying to get ahead of tariffs.
Glass House Brands Offers Opportunity at Scale
• Largest producer of Cannabis in California, with approximately 1.5 million square feet of space for Cannabis and Hemp, producing over 500k lbs per year.
• Owns 5.5 million square feet of cultivation facilities, ready to hyper-sale once federal legalization or rescheduling occurs.
• Moving Cannabis across state lines could soon be legal with the DEA announcing its intention to potentially reschedule Cannabis from I to III, with an expected date in 2025.
• Some of the lowest production costs in the US, with ~$130/lb in cost expected for the full year 2024 with 50% gross margin.
• Improving competitive conditions in California as less efficient competitors withdraw form the market; both wholesale and retail markets are shrinking.
