Cloudflare (NYSE:NET)— mrkt cap $26.8B; Price $78.5; EV/EBITDA NA
PASS. Cloudflare (NET) has been a pioneer in edge computing, built on the mission of making the internet safer and faster. Their CDN network, the first to bundle security services, now spans over 300 cities and handles around 25% of all internet traffic. That said, competitors like CloudFront, Akamai, and Fastly now offer similar capabilities. To stay ahead, Cloudflare has deployed inference-tuned GPUs in 167 cities, driving a 700% QoQ increase in inference requests. While they show significant promise in AI-powered edge computing, increasing competition and a high 18x P/S multiple lead us to pass on the stock for now.
TPI Composites (NAS:TPIC) — mrkt cap $213mm; Price $4.5; EV/EBITDA NA
MORE RESEARCH NEEDED. TPIC is the largest independent US based wind blade manufacturer and partners with OEMs such as GE, Vestas, and Nordex. Excluding China, TPIC has a 33% market share in the USA. 2024 is a pivotal moment for TPIC as it divested a non core segment, fixed quality issues related to their blades, and shuttered a manufacturing facility. Although management is taking the rights steps, TPIC is still operating at a loss. At the present rate, TPCI has about 2 more quarters of current cash burn left; however management is guiding to a profitable second half due to a pickup in demand and ~5% FCF yield in 2025 which would put TPIC at a low single digit multiple of earnings. Although the onshore wind outlook is favorable given decarbonization goals, TPIC execution is paramount given their history of losses. We will continue to monitor the company for operational developments and a potential inflection toward profitability.
Life Time Group (NYSE:LTH) — mrkt cap $5.0B; Price $24.5; EV/EBITDA 13
MORE RESEARCH NEEDED. Life Time is a luxury fitness and wellness brand. About 20% of its locations are based in Texas, with an overall churn rate of 30% and an average membership price of $300 per month. The brand is more family friendly than its main competitor, Equinox. LTH spends less on marketing compared to peers and is focused on increasing discretionary spending among its members. While the company carries considerable debt and is more vulnerable to economic downturns, it remains underpenetrated with only 210 locations.