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Vita Coco: Hydrating Investors with Impressive Growth Prospects◉ Abstract The US coconut water market, projected to grow at 18.10% CAGR to $5.12 billion by 2029 from $1.89 billion in 2023, presents significant opportunities. Vita Coco, the market leader, demonstrates resilience amidst supply chain challenges. Notably, industry giants Coca-Cola and PepsiCo, which previously ventured into this space with ZICO and O.N.E., respectively, have since divested their interests, validating Vita Coco's competitive advantage. With a debt-free balance sheet, 15% revenue growth in FY2023, and expanding EBITDA margins, its fundamentals remain strong. This robust growth trajectory, combined with a solid financial foundation, positions the company as an attractive investment opportunity, offering potential for long-term value creation and substantial returns. Investors seeking exposure to the burgeoning natural and organic beverages market may find this growth story compelling. Read full analysis here……….. ◉ Introduction The coconut water beverage market in the United States is experiencing significant growth, driven by increasing health consciousness among consumers and a rising demand for natural and organic beverages. Here are the key insights into the current state and future projections of this market. ◉ Current Market Size and Growth Rate The U.S. coconut water market was valued at USD 1.89 billion in 2023 and is projected to reach USD 5.12 billion by 2029, growing at a CAGR of 18.10% during this period. ◉ Key Growth Drivers ● Health Consciousness: Increasing consumer preference for natural, low-calorie beverages that offer hydration and essential electrolytes. ● Rising Demand for Functional Beverages: Coconut water is popular among athletes and health enthusiasts for its functional benefits, such as electrolyte replenishment. ● Growth of Organic Products: Rising demand for organic coconut water as consumers seek clean-label products free from additives. ● Innovative Product Offerings: Introduction of flavoured coconut water and convenient packaging options, such as cans, enhances appeal and accessibility. ● Increased Availability and Distribution: Wider retail presence in supermarkets, health food stores, and online platforms boosts market accessibility. ● Cultural Acceptance: Traditional significance of coconut water in regions where coconuts are common supports its global popularity. ● Sustainability Trends: Eco-friendly packaging and sustainable sourcing practices attract environmentally conscious consumers. ◉ Major Players in the US Coconut Water Industry 1. Vita Coco ● Market Position: Vita Coco is one of the leading brands in the coconut water segment, known for its wide range of flavours and strong brand recognition. ● Product Offerings: Offers plain and flavoured coconut water in various sizes. ● Market Share: Holds a substantial portion of the market, often cited as the top player. 2. Coca-Cola Company (ZICO) ● Market Position: Previously owned ZICO, a well-known coconut water brand, which Coca-Cola acquired in 2012 but later discontinued in 2020. ● Current Status: While ZICO is no longer on the market, Coca-Cola remains a significant player through its other beverage offerings. 3. PepsiCo (O.N.E.) ● Market Position: PepsiCo's O.N.E. brand was a notable competitor in the coconut water space until its divestment in 2021. ● Current Status: PepsiCo has shifted focus away from this segment but retains influence through its broader beverage portfolio. 4. C2O Pure Coconut Water ● Market Position: C2O is recognized for its pure coconut water sourced from Thailand, emphasizing quality and natural ingredients. ● Market Share: It holds a significant share among niche brands. 5. Taste Nirvana ● Market Position: Specializes in high-quality coconut water sourced from Thailand, focusing on authentic taste and premium offerings. ● Product Range: Includes both plain and flavoured varieties. 6. Amy & Brian Naturals ● Market Position: Offers 100% natural coconut water with no additives, appealing to health-conscious consumers. ● Distribution: Available through various retail channels, including health food stores. 7. Other Notable Brands ● Additional brands such as Raw C, Bai, and Harmless Harvest also contribute to the market's competitive landscape, offering unique products that cater to different consumer preferences. In an industry poised for robust growth, we will conduct an in-depth examination of Vita Coco's technical and fundamental aspects. ◉ Company Overview The Vita Coco Company Inc. NASDAQ:COCO is a leading developer, marketer, and distributor of coconut water products and other beverages. Its portfolio includes Vita Coco coconut water, coconut oil, and coconut milk, as well as Runa plant-based energy drinks, Ever & Ever packaged water, and PWR LIFT protein-infused fitness drinks. The company also offers private label coconut water and oil solutions for retailers. With a global presence spanning the United States, Canada, Europe, Middle East, Africa, and Asia Pacific, Vita Coco's products are available through various channels, including club stores, food and drug retailers, convenience stores, e-commerce platforms, and foodservice providers. Founded in 2004 and headquartered in New York, New York, the company formerly operated as All Market Inc. before adopting its current name in September 2021. ◉ Investment Advice 💡 Buy The Vita Coco Company NASDAQ:COCO ● Buy Range - 30.3 - 31.3 ● Sell Target - 43 - 44 ● Potential Return - 37% - 40% ● Approx Holding Period - 12-14 months ◉ Market Capitalization - $2.01 B ◉ Technical Analysis ● Weekly Chart ➖ Since its debut in 2021, the stock has undergone a prolonged consolidation phase, during which it developed a Rounding Bottom pattern. ➖ Following the breakout, the stock price surged initially but quickly transitioned into another consolidation phase, forming a Symmetrical Triangle pattern. ➖ Recently, a strong breakout has set the stage for considerable upward momentum. ● Daily Chart ➖ On the daily chart, an Inverted Head & Shoulders pattern is clearly visible. ➖ After a recent breakout, the stock price is now aiming for new highs. ◉ Relative Strength The stock's performance over the past year has not matched up to the Nasdaq index, achieving a modest return of 22.5%, in contrast to the Nasdaq's impressive 40% return. ◉ Location Wise Revenue Breakdown Total Revenue in 2023: $494 million ● Americas Segment: ➖ Total Revenue from Americas: Approximately $424 million. ➖ Revenue from the United States: Around $401.97 million, reflecting substantial growth from $352.73 million in the previous year. ● International Segment: ➖ Total Revenue from International: Approximately $70 million, indicating a smaller contribution compared to the Americas. ◉ Revenue and Profit Analysis ● Year-over-Year ➖ For the fiscal year 2023, the company reported a revenue of $493.6 million, marking a 15% increase from the $427.8 million recorded in fiscal year 2022. ➖ The EBITDA for FY23 also saw a remarkable rise, reaching $57.5 million, a significant jump from just $12.3 million in FY22. ➖ Additionally, the EBITDA margin expanded to 11.6%, up from a mere 2.9% during the same timeframe. ● Quarter-over-Quarter ➖ In the most recent quarter ending in September, revenue fell to $133 million, down from $144 million in June 2024. This figure also represents a decline from $138 million in the same quarter last year. ➖ The EBITDA for this latest quarter was $20.8 million, a decrease from $30.2 million in June 2024. ➖ In September, the diluted EPS experienced a modest rise, increasing to $1 (LTM) from $0.94 (LTM) in June 2024. ◉ Valuation 1. P/E Ratio ● Current P/E vs. Peer Average P/E ➖ When examining the P/E ratio, COCO is at 33.9x, which suggests a considerable overvaluation compared to the peer average of 22.4x. ● Current P/E vs. Industry Average P/E ➖ In the context of the Global Beverage industry, COCO's P/E ratio of 33.7x is significantly higher than the industry average of 18.8x, indicating that it is relatively expensive. 2. P/B Ratio ● Current P/B vs. Peer Average P/B ➖ Looking at the P/B ratio, COCO's current value of 8x is lower than the average of its peers, which stands at 10.5x, suggesting a relative undervaluation. ● Current P/B vs. Industry Average P/B ➖ In comparison to the industry average, COCO's P/B ratio of 8x indicates a significant overvaluation, as the industry average is only 5.1x. 3. PEG Ratio ➖ A PEG ratio of 0.6 suggests that the stock is undervalued relative to its expected earnings growth. ◉ Cash Flow Analysis ➖ In fiscal year 2023, operational cash flow experienced remarkable growth, reaching $107 million, a substantial increase from only just $11 million in fiscal year 2022. ◉ Debt Analysis ➖ The company proudly maintains a completely debt-free status, showcasing its strong financial health. ◉ Earnings per Share (EPS) Growth Forecasts ➖ Experts forecast that the earnings per share (EPS) could increase from $1 to $1.09 by December 2025, and further rise to $1.3 by December 2026. ◉ Top Shareholders ➖ Blackrock has significantly increased its investment in this stock, now holding an impressive 5.55% stake, which marks a 7.4% rise since the end of the June quarter. ➖ On the other hand, The Vanguard Group has a stake of approximately 4.31% in the company, representing a 3% rise from the June quarter. ◉ Conclusion The coconut water market is booming due to health trends, functional beverage demand, innovation, and wider availability. Vita Coco, despite Q3 supply chain woes, is optimistic about the future and is investing in inventory and production capacity. Despite overvaluation, the company's growth potential is significant, driven by the rising demand for organic products.
NASDAQ:COCOLong
by NaranjCapital
Ralph Lauren: Elevate Your Wealth with the Essence of Luxury◉ Abstract Ralph Lauren is thriving in the booming luxury apparel market. The company, founded in 1967, has a market cap of $11.83 billion and generates nearly 44% of its revenue from North America, totaling $2.93 billion. The industry is valued at approximately $110.13 billion in 2024 and projected to reach $151.32 billion by 2029, growing at a CAGR of 6.56%. Recent technical analysis shows Ralph Lauren's stock has outperformed the NYSE Composite index with a 66% annual return. Despite a slight revenue increase of 2.9% year-on-year, EBITDA soared to $1,024 million, reflecting strong financial health. With a current P/E ratio of 17.4x, Ralph Lauren presents an attractive investment opportunity amidst rising global wealth and consumer demand for luxury goods. Read full analysis here . . . ◉ Introduction The global luxury apparel market is currently experiencing significant growth, driven by various factors including increasing disposable incomes, brand loyalty, and the rising influence of social media on consumer behaviour. Here’s a detailed overview of the market size and growth outlook: ◉ Current Market Size According to Mordor Intelligence, the global luxury apparel market was valued at approximately USD 110.13 billion in 2024, with expectations to grow to USD 151.32 billion by 2029, reflecting a CAGR of 6.56%. ◉ Growth Drivers ● Increasing Wealth: The rising number of millionaires globally and growing middle-class affluence, particularly in regions like Asia-Pacific, are significant contributors to luxury apparel demand. ● Consumer Trends: There is a growing perception that luxury goods enhance social status, which fuels consumer interest in high-end fashion. ● Digital Influence: Enhanced online shopping experiences and the effective use of social media for marketing have opened new avenues for luxury brands to reach consumers. ◉ Regional Insights ● Europe Dominant Market: Holds a market share of approximately 34% to 43%. The presence of numerous luxury brands and high purchasing power among consumers drive demand, supported by significant tourist spending on luxury goods. ● North America Strong Demand: The U.S. is a key player, characterized by a wealthy consumer base and increasing brand loyalty, particularly among younger generations who view luxury items as status symbols. ● Asia-Pacific Fastest Growing Market: Anticipated to grow rapidly due to rising disposable incomes and brand awareness, especially in countries like China and India. ● Latin America Emerging Potential: Currently holds a smaller market share but shows promise for growth as consumer awareness and travel increase. ● Middle East & Africa Limited Contribution: This region contributes the least to the luxury apparel market, although countries like the UAE are seeing growth due to tourism. The overall outlook for the luxury apparel market remains optimistic, supported by evolving consumer preferences and increasing global wealth. Amidst the global luxury apparel market's promising growth prospects, we have identified Ralph Lauren as a prime opportunity for investment. With its robust financial performance and impressive technical indicators, Ralph Lauren is well-positioned to propel success. ◉ Company Overview Ralph Lauren Corporation NYSE:RL is a renowned American fashion company known for its high-quality, luxury lifestyle products. Founded in 1967 by the iconic designer Ralph Lauren, the company has become a global symbol of timeless style and sophistication. The company offers a wide range of products, including apparel, footwear, accessories, home goods, fragrances, and hospitality. Ralph Lauren's iconic polo shirt and strong brand identity have contributed to its success, making it a global leader in the luxury fashion industry. ◉ Investment Advice 💡 Buy Ralph Lauren Corporation NYSE:RL ● Buy Range - 190 - 193 ● Sell Target - 245 - 250 ● Potential Return - 27% - 30% ● Approx Holding Period - 8-10 months ◉ Market Capitalization - $11.83 B ◉ Peer Companies ● Tapestry NYSE:TPR - $10.59 B ● Levi Strauss NYSE:LEVI - $8.57 B ● PVH Corp. NYSE:PVH - $5.44 B ● Columbia Sportswear Company NASDAQ:COLM - $4.87 B ◉ Relative Strength The chart clearly illustrates that Ralph Lauren has greatly outperformed the NYSE Composite index, achieving an impressive annual return of 66%. ◉ Technical Aspects ● Monthly Chart ➖ The monthly chart clearly shows that the stock price faced several rejections near the 190 level, which ultimately triggered a significant drop, brought the price down to the 66 level. ➖ Afterward, the price experienced various fluctuations and, after a prolonged consolidation phase, developed an Inverted Head & Shoulders pattern. ➖ Upon breaking out, the price surged upward but encountered resistance again at the previous resistance zone. ➖ However, after a pullback, the stock has successfully surpassed this resistance for the first time in almost 11 years. ● Daily Chart ➖ On the daily chart, the price has formed a Rectangle pattern following a brief consolidation phase and has recently made a breakout. ➖ If the price can hold above the 190 level, we can expect a bullish movement in the coming days. ◉ Revenue Breakdown - Location Wise Ralph Lauren Corporation is a global luxury brand with a strong presence in various regions. ➖ North America remains Ralph Lauren's biggest market, contributing nearly 44% of its total revenue, which amounts to $2.93 billion. ➖ In Europe , the brand is seeing consistent growth, with revenue reaching around $2 billion, making up about 30% of total earnings. ➖ Asia , especially China, is becoming a key player for Ralph Lauren, generating approximately $1.58 billion, or 24% of total revenue. ◉ Revenue & Profit Analysis ● Year-on-year ➖ In the fiscal year 2024, the company achieved a modest revenue increase of 2.9%, totaling $6,631 million, compared to $6,443 million in the prior year. ➖ On the other hand, EBITDA growth has been remarkable, soaring to $1,024 million from $801 million in FY23. The current EBITDA margin stands at an impressive 15.5%. ➖ Additionally, diluted earnings per share (EPS) experienced a substantial year-over-year rise of 28%, reaching $9.71 in FY24, up from $7.58 in FY22. ● Quarter-on-quarter ➖ In terms of quarterly performance, the company reported a decline in sales over the last three quarters, with the most recent quarter showing sales of $1,512 million, down from $1,568 million in March 2024 and $1,934 million in December 2023. ➖ Nevertheless, EBITDA demonstrated significant growth in the June quarter, climbing to $265 million from $176 million in March 2023. ◉ Valuation ● P/E Ratio ➖ Current P/E Ratio vs. Median P/E Ratio The current price-to-earnings ratio for this stock stands at 17.4x, which is notably elevated compared to its four-year median P/E ratio of 5.7x. This suggests that the stock is presently overvalued. ➖ Current P/E vs. Peer Average P/E When evaluating the stock's Price-To-Earnings Ratio of 17.4x, it shows a more attractive valuation, as it is lower than the peer average of 25.5x. ➖ Current P/E vs. Industry Average P/E RL is positioned at a more appealing price point, with a Price-To-Earnings Ratio of 17.4x, which is significantly less than the US Luxury industry's average of 19.x. ● P/B Ratio ➖ Current P/B vs. Peer Average P/B The current P/B ratio reveals that the stock is considerably higher than its peers, with a ratio of 5x compared to the peer average of 3x. ➖ Current P/B vs. Industry Average P/B In comparison to the industry average, RL's current P/B ratio of 5x indicates that it is substantially overvalued, as the industry average is only 2.2x. ● PEG Ratio A PEG ratio of 0.54 suggests that the stock is undervalued relative to its expected earnings growth. ◉ Cash Flow Analysis In fiscal year 2024, operational cash flow experienced remarkable growth, reaching $1,069 million, a substantial increase from $411 million in fiscal year 2023. ◉ Debt Analysis The company currently holds a long term debt of $1,141 million with a total equity of $2,367 million, makes long-term debt to equity of 48%. ◉ Top Shareholders ➖ The Vanguard Group has significantly increased its investment in this stock, now owning an impressive 8.23% stake, which marks a 3.9% rise since the end of the March quarter. ➖ Meanwhile, Blackrock holds a stake of around 4.11% in the company. ◉ Conclusion After a thorough evaluation, we find that Ralph Lauren Corporation is strategically poised to thrive in the expanding luxury apparel market, driven by increasing disposable incomes and a growing appetite for high-end products.
NYSE:RLLong
by NaranjCapital
Corcept Therapeutics: A Shining Star in US BiotechCorcept Therapeutics is making waves in the booming U.S. biotech scene, with its stock surging 46.2% over the past six months. The company, known for its Cushing's syndrome drug, Korlym, reported a staggering 39.1% year-over-year sales increase, reaching $310.6 million in H1 2024. With a market cap of $4.42 billion, Corcept is actively developing new treatments like Relacorilant, which shows promise in clinical trials. Despite a high PE ratio of 35.3x compared to the industry average of 19x, its strong revenue growth and commitment to R&D position it as a solid investment opportunity in the fast-growing biotech market projected to reach $1,786 billion by 2033. ◉ The US Biotech Industry Outlook The biotech boom in the U.S. is hotter than a California summer! Fueled by groundbreaking tech and government cheerleading, the industry is soaring higher than a SpaceX rocket. According to Vision Research Reports, the market is projected to soar by 12.4% CAGR from 2024 to 2033. This rapid expansion is driven by advancements in areas like genomics, gene editing, and personalized medicine, positioning the U.S. as a global leader in healthcare innovation. ➖ The US biotechnology market size was valued at $552.43 billion in 2023 and is anticipated to hit around $1,786 billion by 2033. ➖ Key players like Abbvie Inc., Genentech Inc., and Amgen Inc. are leading the market. Acknowledging the remarkable expansion of the biotech sector, we are taking a closer look at a stock that is showing considerable strength in its technical chart, complemented by robust financial performance. ◉ Company Overview Corcept Therapeutics NASDAQ:CORT is a biopharmaceutical company dedicated to developing innovative treatments for severe endocrine, oncologic, and metabolic disorders. Their lead product, Korlym, is approved for Cushing's syndrome, a rare endocrine condition. Corcept is also advancing several pipeline candidates, including relacorilant for Cushing's syndrome, treatments for various cancers, and potential therapies for neurological conditions like amyotrophic lateral sclerosis and nonalcoholic steatohepatitis. Founded in 1998, Corcept is based in Menlo Park, California. ◉ Significant Stock Performance of Corcept Therapeutics Corcept Therapeutics Incorporated's stock price has risen 46.2% in the past six months, despite a 2% industry decline. This surge is attributed to strong demand for Korlym, the company's sole marketed drug used to treat Cushing's syndrome, a condition that is primarily cured with mifepristone. ◉ The Economic Impact of Korlym The primary source of revenue for Corcept emanates from the sales of Korlym. The drug has showcased remarkable growth, evidenced by a 39.1% year-over-year sales increase, culminating in $310.6 million during the first half of 2024. This growth is attributed to robust demand and an unprecedented number of patients being prescribed the medication. ◉ Corcept's Stock Growth Factors ● Potential of Relacorilant: Positive GRACE study results suggest relacorilant could be a valuable treatment for Cushing's syndrome, potentially driving revenue growth. ● Pipeline Diversification: Corcept's ongoing exploration of relacorilant in GRADIENT study demonstrates commitment to expanding pipeline. ● Regulatory Progress: Successful completion of GRACE study positions Corcept for a new drug application in late 2024. ● Market Need: Successful relacorilant could fill significant unmet medical need for Cushing's syndrome. Investent Advice by Naranj Capital Buy Corcept Therapeutics NASDAQ:CORT ● Buy Range- 38 - 40 ● Target- 55 - 58 ● Potential Return- 35% - 40% ● Invest Duration- 12-14 Months ◉ Market Capitalization - $4.42 B ◉ Peer Companies ● Prestige Consumer Healthcare NYSE:PBH - $3.644 B ● Jazz Pharmaceuticals NASDAQ:JAZZ - $6.766 B ● Amphastar Pharmaceuticals NASDAQ:AMPH - $2.423 B ● Organon NYSE:OGN - $5.142 B ◉ Relative Strength ➖ The chart distinctly demonstrates that NASDAQ:CORT has significantly surpassed the US Smallcap 2000 index, attaining an impressive annual return of 30%, marking a remarkable accomplishment. ◉ Technical Aspects ● Monthly Chart ➖ The historical chart shows that the stock price is trending upward, marked by a sequence of higher highs and higher lows. ➖ Having recently moved out of the parallel channel, the price is set for additional gains. ● Daily Chart ➖ After an extended period of consolidation, the stock price has formed an Inverted Head & Shoulders pattern. ➖ Post-breakout, the stock has stabilized above the breakout point and is now striving for new highs. ➖ A surge in trading volume suggests that buyers are currently showing significant interest. ◉ Revenue & Profit Analysis ● Year-on-year ➖ In the fiscal year 2023, revenue experienced a significant increase of 20.4%, amounting to $482.4 million, compared to $401.9 million in fiscal year 2022. ➖ However, EBITDA faced a downturn, decreasing to $108.3 million in FY23 from $113.9 million in FY22. ➖ The EBITDA margin also saw a reduction, falling to 22.46% from 28.34% in FY22. ➖ Moreover, diluted earnings per share (EPS) rose by 8% year-over-year, climbing to $0.94 in FY23, up from $0.87 in FY22. **While the growth in EBITDA might raise some concerns, it's crucial to acknowledge that the company is heavily investing in its research and development sector, and this investment has seen substantial increases over the years. ● Quarter-on-quarter ➖ In the most recent June quarter, the company reached an impressive achievement, with quarterly sales hitting a record high of $163.8 million. This represents a 12% increase from the $146.8 million reported in the March quarter and a substantial 39% growth compared to $117.7 million in the corresponding quarter of the previous year. ➖ Additionally, EBITDA rose from $29.6 million to $36.2 million during the latest quarter. ◉ Valuation ◉ PE Ratio ● PE vs Median PE ➖ Corcept Therapeutics sustained a median price-to-earnings ratio of 19.7x from December 2019 to 2023. ➖ Presently, with a price-to-earnings ratio of 35.3x, the stock seems to be relatively expensive. ● PE vs. Peers PE ➖ CORT's Price-To-Earnings Ratio stands at 35.3x, making it quite pricey when compared to the average of its peers, which is only 13.6x. ● PE vs. Industry PE ➖ CORT's valuation seems high, as it has a Price-To-Earnings Ratio of 35.3x, which is considerably above the US Pharmaceuticals industry average of 19x. ◉ PB Ratio ● PB vs. Peers PB ➖ The current price-to-book (P/B) ratio suggests that the stock is slightly undervalued, sitting at 7.4x compared to the peer average of 10.8x. ➖ However, it's important to note that a P/B ratio of 7.4x is typically seen as significantly overvalued. ● PB vs. Industry PB ➖ When we analyze the P/B ratio against the industry standard, CORT stands out as being notably overvalued, with its P/B ratio of 7.4x far exceeding the industry average of just 1.7x. ● PEG Ratio ➖ The stock currently seems to present a compelling investment opportunity, featuring a PEG ratio of 0.84. ◉ Cash Flow Analysis ➖ In FY23, operating cash flow increased to $127 million, compared to $120.3 million in FY22. However, it's essential to recognize that when examining the overall trend from FY19 to FY23, there has been a decline in cash flow from operations. ◉ Debt Analysis ➖ CORT operates without any debt, showcasing the robust financial health of the company. ◉ Top Shareholders ➖ Blackrock presently possesses a significant 15.8% ownership in this stock, while The Vanguard Group maintains approximately 9.1% stakes. ◉ Conclusion Following a comprehensive examination of technical and fundamental metrics, our assessment indicates that Corcept Therapeutics possesses substantial growth potential within the US biotechnology sector. Notwithstanding elevated valuations, the company's increasing research and development expenditures demonstrate a strong commitment to its future prospects. Consequently, we consider Corcept Therapeutics a prudent investment choice at this juncture.
NASDAQ:CORTLong
by NaranjCapital
EdTech Unicorn Stride Surges: Strong Financials Fuel Rally!The EdTech revolution is progressing rapidly! As technology advances, internet access grows swiftly, and students seek innovative learning methods, the global EdTech market is flourishing. North America currently holds a significant 37.3% share, but regions such as the Middle East and Africa, Europe, and Asia-Pacific are gaining ground, fueled by government support, digital literacy, and a burgeoning middle class. It's an exciting time for digital learning, and there's even more to look forward to! ◉ EdTech Market Growth Outlook ➖ Valuation projected to rise from $220.5 million in 2023 to $810.3 million by 2033. ➖ Compound Annual Growth Rate (CAGR) of 13.9%. ◉ Government Initiatives Supporting EdTech Sector The US Department of Education has allocated $277 million in new grants through the Education Innovation and Research program to enhance educational equity and innovation, particularly in areas affected by the COVID-19 pandemic, specifically focusing on STEM education and rural regions. Recognizing the enormous opportunity in EdTech, we're examining a stock that exhibits remarkable growth potential within the sector. ◉ Company Overview Stride Inc. NYSE:LRN is a tech-driven education service provider offering proprietary and third-party online curricula, software, and services in the U.S. and globally. Their products support personalized learning for K-12 students through virtual and blended public schools, individual online courses, and supplemental materials in subjects like math, English, science, and history. Stride also emphasizes career learning in fields such as IT, healthcare, and business, and operates tuition-based private schools. Additionally, they provide post-secondary programs in software engineering and healthcare under brands like Galvanize and Tech Elevator, along with staffing services. Rebranded from K12 Inc. in December 2020, Stride has been incorporated since 1999 and is headquartered in Reston, Virginia. Investent Advice by Naranj Capital Buy Stride NYSE:LRN ● Buy Range- 77 - 80 ● Target- 115 - 120 ● Potential Return- 45% - 50% ● Invest Duration- 12-18 Months ◉ Market Capitalization - $3.31 B ◉ Peer Companies ➖ Graham Holdings NYSE:GHC - $3.23 B ➖ Adtalem Global Education NYSE:ATGE - $2.67 B ➖ Grand Canyon Education NASDAQ:LOPE - $4.04 B ➖ Laureate Education NASDAQ:LAUR - $2.25 B ◉ Technical Aspects ● Monthly ➖ The stock price initially faced resistance at $40 in 2011 but later found support at $17. ➖ Despite several attempts to break through resistance, the stock experienced significant declines. ➖ However, after a 12-year period, it finally broke out and rallied to a high of $84. ➖ Currently trading at $77.7, the stock is expected to continue rising in the near future ● Daily ➖ The daily chart indicates a clear uptrend in the price movement. ➖ An ascending triangle pattern has formed, and following the breakout, the price has retraced to the breakout level. ➖ At this moment, the price is attempting to find support at the 50 EMA. ➖ From a technical standpoint, the stock is resting at a support level, making it an attractive option for accumulation with a mid to long-term investment outlook. ◉ Relative Strength ➖ The chart clearly illustrates that Stride Inc. has greatly outperformed the US Smallcap 2000 index, achieving an impressive annual return of 82%, which is a notable achievement. ◉ Revenue & Profit Analysis ● Year-on-year ➖ In FY24, revenue surged by 11.3%, reaching $2,040 million, up from $1,837 million in FY23. ➖ EBITDA saw a substantial boost, climbing to $295.3 million in FY24 compared to $225.2 million the previous year. ➖ The EBITDA margin also experienced growth, rising to 14.47% from 12.26% in FY23. ➖ Additionally, diluted EPS witnessed an impressive increase of 57.91%, jumping to $4.69 in FY24 from $2.97 in FY23. ● Quarter-on-quarter ➖ In the latest June quarter, the company achieved a remarkable milestone with quarterly sales reaching an all-time high of $520.8 million. This marks a 3% increase from the $504.9 million recorded in the March quarter and a significant 10.75% rise compared to $470.3 million in the same quarter last year. ➖ EBITDA declined from $100.2 million to $82.3 million in the latest quarter, representing a 17.8% decrease. ◉ Valuation ◉ PE Ratio ● Current PE Ratio vs. Median PE Ratio ➖ The present price-to-earnings ratio for this stock is 16.2x, which is considerably below its four-year median price-to-earnings ratio of 18.9x times, indicating that the stock is currently undervalued. ● Current PE vs. Peer Average PE ➖ The stock presents a favorable valuation when considering its Price-To-Earnings Ratio of 16.2x, which is lower than the average of its peers at 18.3x. ● Current PE vs. Industry Average PE ➖ Stride appears to be offered at a more competitive price, featuring a Price-To-Earnings Ratio of 16.2x, which is significantly below the average of 19.2x for the US Consumer Services industry. ◉ PB Ratio ● Current PB vs. Peer Average PB ➖ The present PB ratio in relation to the average PB of peers indicates that the stock is somewhat higher, with a ratio of 2.8x in contrast to the peer average of 2.6x. ● Current PB vs. Industry Average PB ➖ When comparing the current PB ratio to the industry average, Stride appears to be considerably overvalued, exhibiting a PB ratio of 2.8x, while the industry average stands at 1.6x. ◉ Cash Flow Analysis ➖ The cash generated from operations has experienced substantial growth in fiscal year 2024, increasing to $278.8 million from $203.2 million in fiscal year 2023. ◉ Debt Analysis ➖ Stride has a total debt of $528.2 million, resulting in a debt-to-equity ratio of 0.44. ➖ The company generates sufficient interest income to exceed its interest expenses, indicating that interest payment coverage is not an issue. ◉ Top Shareholders ➖ BlackRock Inc. holds a significant ownership interest in this company, with a notable stake of 14.9%. This level of investment reflects BlackRock's confidence in the company's potential for growth and profitability. ➖ The Vanguard Group also maintains a considerable presence, owning 10.7% of the company's shares. ➖ Together, these two investment giants represent a substantial portion of the company's equity, indicating strong institutional support and interest in its future performance. ◉ Conclusion Upon examining Stride Inc.'s financial performance, we focused on essential metrics such as revenue growth, profit margins, and the stability of cash flow. Additionally, we assessed the company's future growth potential by looking into industry trends and the competitive landscape. As a result, we are confident that Stride Inc. is positioned to capitalize on new opportunities while effectively navigating challenges, making it an attractive option for both investors and stakeholders.
Editors' picks
NYSE:LRNLong
by NaranjCapital
6
no World War 3 - better be long MOEXhi fellow traders, since very long time that such a simple theme popped on my radar and it is so easy to lay down the reasoning. all is based on a single geo-political fact, war world 3 to happen or not, if happens I assume that all stock markets will free fall, crash, and get demolished. including MOEX. if world war 3 will not start, we have the MOEX as attractive long for the following reasons: 1- commodities rally of recent months to serve MOEX and the Russian Ruble very well, they are going to cash the commodities rush. 2- the Russian Ruble is heavily oversold, its handling by the Russian central bank is very healthy and offers great nominal carry reward, MOEX is quoted in Rubles. 3- if we get off the headlines of the "news" institutions/organizations, Russia is definitely a young tiger wishing to turn into a great tiger. remember, central bank with positive real yields is strong signal for very healthy macro policy running the economy. in case you are interested, I have list of specific listed companies that are on my buy and hold list, the investment theme includes calculation made for future dividends and in general it is a theme for the next 3-10 years with clear targets for scale-out / scale-in activities during the journey every 8/21 weeks cycle depends on each specific listed stock within the theme. for that you need to contact me directly. so, risk is world war 3 and reward is best available investment in a currency and stock index directly exposed to commodities bull/boom/flight cycle. the ideas are mine, the decision is yours! good luck
RUS:MOEX
by FlukeTrading
5