Consider buying Oddity Tech (ODD) on any weakness ahead of its major new brand launch, which is expected in the second half of 2024. For real estate exposure, Realty ONE Group (REAX) is presented as a clear buy and a top pick due to its attractive valuation. In the insurtech sector, Root Insurance (ROOT) is highlighted as a favorite high-growth play that appears very cheap relative to its rapid expansion. Keep an eye on premium footwear brand On Holdings (ONON), which is viewed as an undervalued 'Nike challenger' that could present a buying opportunity for long-term investors. Lastly, Gambling.com (GAMB) offers a potentially cheap way to invest in the growing US online gambling market.

Root Insurance (ROOT)

• Business Model: An insurance technology (insurtech) company focused primarily on car insurance. It uses an AI-enabled, app-based platform for onboarding customers. It assesses risk by having users drive with their phone's location services on to monitor driving habits.
• Sentiment: Bullish. The speaker refers to it as their "favorite insurance play," preferring it over competitor Lemonade (LMND).
• Growth: The company is growing extremely fast.
  • The compound annual growth rate (CAGR) of its premiums (revenue) is 45%.
  • The most recent report showed 61% growth in premiums.
  • Analysts predict 53% premium growth over the next 12 months.
• Distribution Strategy: It has innovative sales partnerships that fuel its growth, including:
  • Embedding its insurance offerings within car marketplaces like Carvana (CVNA).
  • Partnering with car dealers and online insurance marketplaces.
• Valuation & Metrics: The speaker finds the stock very cheap based on their custom metric (Enterprise Value / Gross Profit / Revenue Growth), which stands at a very low 0.04.
• Key Strength: The speaker highlights its diversified customer base of millions of individuals, which makes its revenue more stable and less susceptible to single points of failure (like a change in government policy).

Takeaways

• Root appears to be a high-growth, high-risk play in the insurance sector that is leveraging technology and unique partnerships to rapidly gain market share.
• The stock has been volatile but is considered very cheap by the speaker, especially given its impressive growth metrics.
• Investors interested in the insurtech space might find Root to be an interesting alternative to other names, with a strong focus on a direct, data-driven approach to car insurance.

On Holdings (ONON)

• Business Model: A Swiss-based, founder-led footwear and apparel company positioned as a "Nike Challenger." It is known for its premium, expensive running shoes.
• Sentiment: Bullish. The speaker is actively monitoring the stock and sees it as undervalued.
• Growth & Financials: The company exhibits strong financial health and growth prospects.
  • Revenue is predicted to grow 32% over the next 12 months.
  • It boasts a very high gross margin of 61%.
  • The company achieves a "Rule of 40" score of 44 (calculated as Revenue Growth % + EBITDA Margin %), indicating a healthy balance of growth and profitability.
• Valuation: The speaker believes the stock is cheap and has been "forgotten by the market."
  • Its valuation metric (Enterprise Value / Gross Profit / Revenue Growth) is 0.2.
  • It is considered "much cheaper than Nike" and scores better on the speaker's metrics than both Nike (NKE) and Lululemon (LULU).
• Brand Strength: The company is described as a "cultural consumer phenomenon," with strong brand loyalty despite its high price point.

Takeaways

• On Holdings could be an opportunity to invest in a high-growth premium consumer brand at a valuation that appears cheaper than its larger competitors.
• The speaker is watching for a potential entry point, suggesting that a slight miss on earnings could present a buying opportunity for long-term investors who believe in the brand's story.
• This is a play on a strong, founder-led brand that is successfully carving out a niche in the competitive athletic apparel market.

Oddity Tech (ODD)

• Business Model: A direct-to-consumer online beauty company, described as the "HIMS of beauty." It owns the brands Il Makiage (makeup) and SpoiledChild (skincare).
• Sentiment: Very Bullish. The speaker owns this stock and views recent weakness as a buying opportunity.
• Growth & Financials: The company's numbers are very strong.
  • Revenue is predicted to grow 26% over the next 12 months.
  • It has an exceptionally high gross margin of 72%.
  • The "Rule of 40" score is an impressive 55.
• Valuation: The speaker considers the stock cheap, with a valuation metric (Enterprise Value / Gross Profit / Revenue Growth) of 0.18. It is noted as being cheaper than competitor Elf Beauty (ELF).
• Competitive Advantage:
  • Its direct-to-consumer model avoids reliance on struggling retailers.
  • It uses an AI-powered questionnaire to perfectly match foundation to a customer's skin tone. This solves a major customer pain point and leads to high repeat purchases, creating "recurring-like revenue."
• Upcoming Catalyst: A major catalyst is expected in the second half of 2024 (before Christmas) with the launch of its third brand, a new medical-grade skincare line.

Takeaways

• Oddity is a technology-driven beauty company with very high profitability and a loyal customer base.
• The speaker is particularly bullish due to the upcoming launch of a new brand, which could act as a significant catalyst for the stock price.
• Investors looking for a growth stock in the consumer space with a strong digital-first model and a clear competitive advantage may find Oddity compelling.

Bonus Stocks

The speaker briefly mentioned three additional stocks they are tracking.

Gambling.com (GAMB)

• Context: An online gambling affiliate company that owns various websites and provides data to casinos, benefiting from the legalization of online gambling in the U.S.
• Valuation: Considered "very cheap" with a valuation metric of 0.12 and a "Rule of 40" score of 45.
• Risk: The stock has sold off due to concerns that changes in online advertising rules could negatively impact its business.
• Takeaway: A potentially undervalued way to play the growing US online gambling market, but investors should be aware of the risks related to online advertising.

Realty ONE Group (REAX)

• Context: The speaker's primary "real estate play." The transcript mentions "Reacts," which is likely a reference to Realty ONE Group (REAX).
• Valuation: The speaker considers this a "clear buy" and owns the stock. It is described as very cheap with a valuation metric of 0.1 and a "Rule of 40" score of 53.
• Takeaway: For investors seeking exposure to the real estate sector, the speaker is extremely bullish on REAX based on their quantitative screening.

Byrna Technologies (BYRN)

• Context: A company that produces non-lethal self-defense devices, described as a "giant PB gun." The speaker finds it interesting but cannot cover it in detail due to YouTube's content policies.
• Key Feature: The speaker highlights that this stock is "highly uncorrelated" to anything else they own, which can be a desirable trait for portfolio diversification.
• Takeaway: An interesting, niche investment in the personal security space that may offer diversification benefits. Investors would need to do their own research, as the speaker did not provide details.