Investideas

What's the idea? Sportradar is at the forefront of the rapidly expanding sports betting market, driven by organic growth and increasing legalization in the US. More than 34 states have already legalized some forms of sports betting, and others plan to launch sports betting sites before the end of 2023. Sportradar has a unique business model characterized by sustainable growth and significant potential to improve operating leverage. We believe the sports data industry will become a concentrated market dominated by a limited number of players. Sportradar is likely to be one among the big winners with a large market share, as the company has several competitive advantages. Given the largely paper-based nature of some operating expenses, we expect Sportradar to continue improving profitability over the long term. Sportradar’s only direct competitor, Genius Sports, is growing at a slower pace and is still far from breakeven, but is trading at comparable levels to SRAD. According to the Wall Street consensus estimate, the stock has an upside potential of 60%.

What's the idea? DigitalOcean is a growth company operating in the cloud computing industry and providing startups and SMBs with a range of PaaS, IaaS and SaaS offerings. Boosted by COVID-19 pandemic, the cloud computing industry is set to grow exponentially in the coming years due to the business transformation, better security and improved productivity advantages that it offers to various businesses. DigitalOcean has a diversified product portfolio and more than 600,000 constant clients globally. It has been growing rapidly over the last several years, but currently, amid ongoing market headwinds, the company’s revenue growth rates are slowing down. DigitalOcean has recently made two important acquisitions that could shape the company’s future if the entities are successfully integrated into existing business. Despite the growth slowdown, the company’s management targets high margins and is committed to a share buyback program that could prop up the stock price during economic and industry fluctuations.

What's the idea? We expect Ryanair to be a major beneficiary of the ongoing recovery of the air travel industry in Europe. Ryanair has established itself as one of Europe’s largest airlines thanks to its continuous improvement and the expansion of services provided at low fares. With annual passenger traffic expected to reach 300 million customers, Ryanair could take 20% to 25% of Europe’s short-haul air travel market. Although the European air travel industry still lags behind the 2019 performance levels, Ryanair already surpassed its pre-pandemic results in FY 2023. Ryanair is one of two major airlines with negative net debt. In addition, the firm has the best margins in the industry. According to the Wall Street consensus, the stock has more than 40% upside potential. Ryanair Depositary Receipts are also available in USD under the RYAAY.US ticker.

The ongoing energy transition and accelerating vehicle electrification is likely to boost the global EV sales, driving demand for critical feedstock, such as lithium. Livent is a leading fully-integrated lithium producer, with significant lithium resources in Argentina and Canada and lithium manufacturing facilities in the U.S., China and the United Kingdom, close to the firm’s customers. The company’s management has been implementing an immense growth strategy, aimed at both expansion of production capacity and diversification of product portfolio with high added value products. The anticipated Livent’s merger with Allkem will create the world’s third-largest integrated lithium chemicals producer by production capacity. The company has been capitalizing on Argentina's favorable tax and regulatory environment for decades, and the company’s access to low-cost lithium operations in the country has made Livent one of the most profitable lithium producers.

The ongoing energy transition and sustainable development policies will drive global investments in renewable energy, with a significant portion dedicated to solar energy in the coming years. According to IEA forecasts, installed PV capacities are expected to increase 2.3 times by 2027. SMA Solar Technology is the leading European producer of PV inverters and second globally after Chinese manufacturers. The company stands out due to its widely diversified and integrated portfolio of products and services that complement each other, creating added value for customers. SMA Solar Technology’s management prioritizes customer needs, technological leadership, and enhancing profitability, laying the foundation for further growth and expansion into new markets. Favorable macro conditions and strategic management actions have led to record-breaking results in H1 2023. Forecasts for FY2023 have been revised upward.

Growth in demand for LNG: by 2026, the production of this type of fuel will increase by 19% compared to 2019, in monetary terms until 2028 the market will grow with a CAGR of 6.75% and will reach $103.4 billion. A shortage of fixed regasification terminals in Europe is forecast to lead to an increase in demand for floating units (FSRUs). This market in 2023-2027 will increase with a CAGR of 7.88% and reach $805.25 million by that date. The company operates one of the largest FSRU fleets in the world, and by 2026 it is expected to be extended with at least one more vessel. The company has been paying dividends since 2022, with a current yield of 0.51%.

Crocs has come a long way from being a niche watersports shoe retailer to becoming a household name of iconic clogs. High brand awareness provides the firm with a significant competitive advantage in the form of price power. While Crocs has exhausted its low base effect, we believe the firm still has room to further expand its core brand. The HEYDUDE brand accounts for about a quarter of Crocs’ total revenue and is also an important growth driver capable of extending the company's runway. Crocs has double-digit revenue growth, high margins, and solid cash flow. Despite the better financials compared to peers, Crocs trades at a discount to the industry average.