“Baby With The Bathwater” Idea Forum
Given the sharp shift toward macro dynamics, MYST hosted a generalist idea event to identify companies that have been overly penalised amid the recent downturn. All but one of the participants felt the market may hit new lows (S&P 500 ~4,500) as consensus earnings estimates are likely too high. While most of the stocks presented were not far from their 52-week (or much longer) lows, participants highlighted companies with underappreciated earnings resilience (Byrna Technologies, CCC Intelligent Solutions, Six Flags, IMAX, Nvidia) and businesses misperceived as Trump tariff / DOGE losers (Aptiv, KBR, SharkNinja). However, the stock offering the biggest upside (100%+) was Chart Industries (LNG export policy beneficiary with rising recurring revenue / improving leverage profile).
Edition: 210
- 02 May, 2025
Technology
Poor risk/reward - priced for significant profit growth despite weak fundamentals. To justify its current price of $53/share, KBR must improve its NOPAT margin to 5% and grow revenue by 8% compounded annually for the next decade. In this scenario, KBR grows NOPAT by 17% compounded annually. Given that KBR’s NOPAT fell 8% compounded annually over the past decade, these expectations look overly optimistic. Even if KBR can achieve a NOPAT margin of 4% and a 5% revenue CAGR over the same timeframe, the stock is worth just $31/share today (40% downside).
Edition: 133
- 14 April, 2022