Investideas

What's the idea? Couchbase provides database solutions that meet today's demands for information scaling rates and business continuity. Microsoft's recent global outage due to a bug in its CrowdStrike software proved that even short-lived outages can cause multi-billion dollar damage, which could prompt businesses to move to more reliable and modern NoSQL databases. In 2024, companies are poised to spend an average of $35.5 million to improve their IT systems, a 27% increase from the previous year. Following Q1 2025, Couchbase increased the amount of revenue it expects to recognise in the current financial year by 18.16% and backlog by 20.77%. The closing of several Couchbase deals with new customers has been postponed from Q1 to Q2 of FY2025 due to force majeure, which will boost the company's results for the current fiscal period. Couchbase raised its full-year revenue guidance to $204.5–$208.5 million. The company continues to develop its new Capella service, which has recently become a major factor in attracting new customers.

What's the idea? In his recent speech, Federal Reserve Chairman Jerome Powell said that the central bank would base its interest rate decisions on macroeconomic data and not on the upcoming presidential election. It seems that today's data are favorable for the start of monetary easing. While the market has been expecting rate cuts for a long time, current economic data finally reflect a real slowdown in inflation and rising unemployment. At least one rate cut is expected in 2024 and this trend is likely to continue into 2025. One of the easiest ways to capitalize on interest rate changes is to invest in long-duration bonds, although building such a portfolio can be costly. For investors willing to speculate on interest rates for higher returns, we recommend buying CALL options on iShares 20+ Year Treasury Bond ETF with a strike price of $94.0 and expiration date of 20/06/2024. The option will cost around $5.50, while buying one contract will cost $550 as options are traded for 100 shares.

What's the idea? The crude oil tanker market is expected to face heightened demand and longer routes as a result of geographic demand-supply differences among regions. Another current driver is political instability that reshuffles global fleet routes and contributes to growth of needed charter times. As the average mileage remains at historic highs, oil tanker companies’ revenues will benefit. Supply of oil tankers remains rigid due to price rise and length of investment cycle in the ship construction industry. The aging fleet contains supply growth as well. Northern American has a strict specialization on Suezmax-type vessels, which contains its operational and maintenance costs and provides operational flexibility. The company targets regular dividend payments, despite its inherent business volatility and manages to pay dividends even in the negative-EPS years.

What's the idea? Deutsche Lufthansa AG is one of Europe's leading airline groups. In addition to its own brand, Lufthansa Airlines, the group owns several other airlines, including SWISS, Austrian Airlines, Brussels Airlines and Eurowings. Air passenger transport in the EU reached 976.4 million passengers in 2023, up by 19% year-over-year (YoY). However, the figure remains 5.7% below the pre-pandemic level in 2019. In 2024, passenger traffic in European airports may surpass the 2019 level by 3.2%. Operationally, Lufthansa faced challenges in Q1 2024, including widespread strikes. Nevertheless, traffic revenue in the Passenger Airlines segment increased by 7% YoY, driving total revenue up by 5% to €7,392 million.

What's the idea? Tourist traffic to Macau continues to grow, with 57% more passengers traveling on the Hong Kong-Zhuhai-Macau route in the first five months of 2024 compared to the same period last year. On 30 June 2024, the Chinese authorities opened a bridge between Shenzhen and Zhongshan in Guangdong Province, improving accessibility to Macau from mainland China and boosting the economic prospects of the Greater Bay Area. Las Vegas Sands exceeded its Q1 2024 guidance on key financial metrics. Given the positive passenger traffic dynamics in Macau, this scenario is likely to be repeated in Q2, which could lead to a positive revaluation of the company's shares. We recommend buying CALL options on LVS stock with a strike price of $45 and an expiration date of 20/09/2024. The option will cost around $2.70, while one contract will cost around $270 as options are traded for 100 shares.

What's the idea? Tenable is able to quickly attract new customers due to its market leadership, which is noted by several analysts. Modern technology requires higher investment in cybersecurity, which stimulates the growth of the market for relevant tools. The volume of the global cyber threat management market by 2032 will reach $31.5 billion, implying an average annual growth of more than 10% in 2023-2032. In 2023, Tenable closed a deal to purchase a company in the field of cloud infrastructure cybersecurity — Ermetic. In June 2024, the company announced the acquisition of Eureka Security, which will further expand Tenable's offerings in the field of cloud environment security. Tenable has created a strategic alliance with Deloitte, which may give an additional boost to the growth of the customer base in the near future. The company began to attract larger customers by offering comprehensive cybersecurity services. Tenable implements a share repurchase program, the authorized amount of which is 1.27% of the company's market capitalization.

ON Semiconductor Corporation (ON) is a technology company that provides energy management and sensor solutions, with a primary focus on the automotive and industrial markets. In the first quarter of 2024, the automotive sector accounted for 55% of the company's revenue, the industrial sector for 25%, and the remaining sectors for 20%. From a geographical perspective, the company's key market is the Asia-Pacific region. Currently, the company is facing difficulties. In the 1st quarter of 2024, its revenue decreased by 5% y/y and amounted to $1.86 billion, while diluted earnings per share (EPS) fell by 10% to $1.08. This was due to a significant reduction in revenues in the industrial and other segments: their incomes fell by 14% and 12% y/y respectively. Moreover, inventory levels increased by $35 million q/q, and the inventory turnover ratio increased by 15 days to 194 days.

What's the idea? Visual content is increasingly used in advertising around the world, driving demand for Shutterstock's services. The company has a large target market, especially in the Data, Distribution, and Services segment, with revenue nearly doubling in Q1 2024 due to the company’s partnerships with neural networks. The global digital content market is expected to grow at a compound annual growth rate of 6.1% through 2032 to reach $285.94 billion by the end of the forecast period. The recent acquisition of Envato will allow Shutterstock to double the number of subscribers, as well as increase annual revenue by 20% and adj. EBITDA by 15%. Due to improved business performance in Q1 2024, Shutterstock increased its 2024 revenue growth forecast to 5.5%–7%. The company pays dividends with an annual yield of 3.03% and also has a share buyback programme with an authorized amount equivalent to 5.05% of its market capitalisation.

Savers Value Village Inc. is a second-hand apparel and accessories retailer. It is the largest for-profit thrift operator in the US and Canada based on number of stores, with a total of 326 stores in the US, Canada and Australia. Thrift stores is a sector of the broader second-hand market that includes traditional options such as Goodwill, Salvation Army, and yard sales. The US second-hand apparel market grew 10.3% in 2023 and is forecast to reach $73 billion by 2028, with an average annual growth of 11.2% in 2023–2028. However, many resale and thrift companies struggle to stay afloat since turning a profit in the pre-owned clothing business is challenging. As a thrift operator, SVV conducts its business through three main operating stages: supply and processing, retail, and wholesale trade. Over the past several years, the company’s management has built a powerful, vertically integrated business model, with a customer base of 5.5 million of active members enrolled in the US and Canadian loyalty programs.