Spring 2020

Weng ’21 shares a long idea on Sysco Corporation, indicating a positive outlook on the company's performance.

Ruth Chen ’21, Yi Cheng ’21 and Mark Hu ’21 present their long thesis on Verisk Analytics, suggesting confidence in its future growth and stability.

Manas Bajaj ’21, Akshay Chawla ’21 and Amitaabh Sahai ’21 recommend buying EPAM Systems, reflecting their belief in the company's strong market position and growth potential.

EPAM is expected to outperform street estimates due to its strong pipeline and demand for services, which is currently outpacing supply. The company has a solid asset-light operating profile, high cash generation, and a large cash balance that provides insulation from market dislocations. The projected exit price is $430, with an IRR of 24%.

Sysco is positioned to benefit from a once-in-a-lifetime industry consolidation opportunity due to its strong balance sheet and capacity to withstand significant declines in revenue. The company is expected to capture market share from under-capitalized competitors forced to exit the market as a result of COVID-19 impacts. The price target is $92, representing a 73% upside.

Sysco is positioned to survive and thrive post-COVID-19 due to its strong balance sheet and national contracts that help cover fixed costs. The company is expected to maintain its market share and benefit from market share gains as smaller competitors struggle, leading to an estimated 20% annual return. Additionally, there is potential for significant upside from international expansion opportunities, which could add approximately $7 in value per share.

Verisk has a dominant and sustainable economic moat leading to strong pricing power, operates in a large and growing total addressable market with potential to cross-sell, and its energy segment is expected to stabilize after recent downturns. The investment thesis highlights the company's significant data advantage and high customer retention rates, projecting a price target of $221 for a 53% upside and 17% IRR.

Sysco is considered a strong investment due to its position as a leading distributor of food products and supplies to restaurants, healthcare, and educational facilities, benefiting from the recovery of the food service industry post-pandemic.

Verisk Analytics is positioned to benefit from stabilization in its energy segment, which has shown resilience during downturns due to its subscription-based model and high retention rates. The company has diversified its customer base through strategic acquisitions, enhancing its growth potential. Despite trading at a premium valuation, its superior fundamentals justify this multiple, with a target price of $221 based on expected EBITDA growth and market conditions.

TransDigm is a high-quality aerospace parts manufacturer that has seen its stock price decline significantly due to panic surrounding the coronavirus pandemic. The company derives over 75% of its EBITDA from the stable aftermarket segment and has strong pricing power, with a capital structure that can withstand current market conditions. Despite the temporary decline in air traffic, TransDigm's fundamentals remain strong, making it an attractive long-term investment.

TransDigm is attractively priced at 11x normalized free cash flow, with expected intrinsic value growth of 20-30% per year driven by volumes, pricing, margin expansion, and capital allocation. Insiders have recently purchased significant shares, indicating confidence in the company's future performance.

JET is a high-quality online food delivery business with strong network effects, recurring revenue, and pricing power. The company is expected to grow significantly due to low penetration rates in the online food delivery market and has proven profitability in various international markets.

Evolution is the leading global provider of live gaming services, benefiting from a shift towards live gaming over computerized games. The company has shown substantial growth in earnings and market share, particularly in Europe, and is well-positioned to capitalize on the growing online gaming market in North America and other regions.

Recommendation to long EPAM Systems with a 3-yr target price of $430 (~24% IRR), driven by strong growth potential from robust industry tailwinds, an asset-light operating profile, and attractive valuation compared to historical levels and intrinsic value.

We are actually quite bullish on a number of names right now. If you have the view that we will emerge from a quarantine or social distancing within a two-quarter period, there are companies that we know well that are priced as if they will go bankrupt. If we can assess their liquidity and prospective cash flows, we believe they will survive and recover.

There is a materials company that we think the equity's worth north of $20 that's in a very, very good market position, and that stock was down in the low single digits. If we think that company will survive, from its current stock price it's going to be a double or triple pretty easily.

Clearway is an independent power producer with significant renewable energy capacity. The stock dropped 40% due to a dividend cut related to a technical default from Pacific Gas's bankruptcy, but the analysis suggests that the power contracts will not be rejected, leading to a potential recovery in the stock price. The investor believes the stock has a favorable risk-reward profile, with significant upside potential as the market normalizes.

Ingevity has a strong secular growth story driven by regulatory changes that require increased gasoline vapor emission capture. The company is expected to double its profitability in the filter business due to these regulations, which are not fully recognized by the market. Additionally, the company has a unique position in the market with limited competition, making it an attractive investment opportunity.

Ingevity has a strong market position due to regulatory changes in both the US and China that favor its Tier 2 carbon products. The company has built a scale facility in China ahead of regulations, allowing it to capture significant market share. With the potential for price increases and a monopoly-like position, Ingevity is well-positioned to offset competition in the Tier 3 market as well.