Michael Burry, the legendary investor who famously predicted the 2008 financial crisis, made waves with his recent stock picks again. Burry’s insight and strategic thinking led him to invest in three seemingly disparate industries: healthcare, travel, and entertainment.
Burry’s selection appears to have in common a tapestry of strategic considerations, financial insights, and growth potential. The article analyzes Burry’s rationale for betting on these three diverse stocks. It delves into the intricacies of the first’s integration strategy, the second’s technological leaps, and the third’s ambitious plans for expansion. Here are the three Michael Burry stocks:
Michael Burry Stocks: CVS Health (CVS)
The health conglomerate CVS Health’s (NYSE:CVS) strategic initiatives and financial performance indicate a strong foundation for growth and value creation.
One of the most significant contributors to CVS Health’s long-term growth is the integration of Signify Health and Oak Street Health. These two are value-based care assets. They drive patient engagement and growth by connecting these acquisitions with existing CVS Health assets such as Aetna, MinuteClinic, and CVS Pharmacy. This integration will lead to synergistic opportunities and an accelerated growth trajectory.
Further, another notable achievement is the expansion of CVS Health’s exchange offering to 12 states, with over one million new members onboarded. This establishes a connection for these members across its integrated assets. As a result, it is laying the groundwork for future earnings growth and increased engagement across its diversified businesses.
CVS Health’s strong cash flow generation financially enables them to invest in their long-term strategy and return value to shareholders. Over $13 billion of operating cash flow was generated for the current fiscal year. It has also returned $3.5 billion to shareholders through June 30, enhancing shareholder value.
Notably, it has a diversified business model. The model comprises healthcare benefits, health services, pharmacy, and consumer wellness segments. Despite emerging headwinds, it has delivered strong revenue growth, adjusted EPS, and cash flow from operations in the recent quarter.
Strategically, the acquisitions of Signify Health and Oak Street Health have strengthened the company’s healthcare delivery assets. Specifically, Signify Health’s in-home evaluations drive engagement and improved care outcomes. Similarly, Oak Street Health’s community presence accelerates patient growth and clinic profitability.
Finally, CVS Health can navigate challenges while maintaining growth and executing its long-term strategy. It is demonstrated by its ability to manage cost structures, optimize operations, and invest in critical growth areas such as health services and technology. I believe it is one of the best Michael Burry stocks to buy right now.
Expedia (EXPE)
Expedia’s (NASDAQ:EXPE) platform transformation is ongoing, with the recent launch of the “One Key” travel rewards program in the U.S.
The program unifies the loyalty offerings across Expedia’s core brands, providing customers with a common currency (One Key Cash) for booking flights, hotels, vacation rentals, car rentals, cruises, and activities. This unique offering may continue to drive customer engagement and loyalty, ultimately increasing lifetime value.
Notably, Expedia operates in both B2C and B2B segments. Its B2C strategy focuses on building customer loyalty through app usage and loyalty membership, which results in higher repeat rates and increased profitability per transaction.
Strategically, Expedia invests in cutting-edge technology, including AI and machine learning. For instance, the launch of conversational trip planning powered by ChatGPT represents its focus on enhancing and personalizing the customer experience. The integration of AI technologies allows for improved recommendations and streamlined trip planning.
Also, Expedia’s single-tech strategy (AI and machine learning) allows all its brands to benefit from its product features. That may be driving further differentiation.
Regarding market expansion, Expedia’s growth isn’t limited to North America and Europe. It has witnessed stronger growth in APAC and Latin America. It signals diversification of its revenue sources and leads in emerging markets with increasing travel demands.
Expedia’s partnerships with major players like MasterCard (NYSE:MA) and Walmart (NYSE:WMT) underscore its ability to leverage technology and travel expertise for mutually beneficial collaborations. As a result, it is expanding its market reach and driving growth.
Finally, Expedia’s focus on acquiring and retaining loyalty members and app users has shown success, as active loyalty members reached new highs and app usage increased. The strategy translates to higher profitability per transaction and greater customer lifetime value. That said, it is one of the best Michael Burry stocks, in my book.
MGM Resorts (MGM)
MGM Resorts (NYSE:MGM) has significant consolidated net revenues based on solid domestic portfolio earnings and remarkable results at MGM China and BetMGM.
In Las Vegas, there’s an upsurge in demand, exemplified by increased casino drop, hotel revenues, and occupancy. The agreement with Marriott (NASDAQ:MAR) was a watershed moment, giving rise to the MGM collection with Marriott Bonvoy. This alliance will enable over 180 million members to reserve rooms and accrue or redeem Marriott Bonvoy points across 17 MGM Resorts properties.
That, in turn, is leading to enhanced profitability through lowered customer acquisition costs, higher ADRs, and elevated on-property spending. Forecasts predict that by 2025, Marriott’s customer base will constitute a significant portion of MGM’s hotel mix, bolstering premium rates.
Regional operations witnessed year-over-year top-line growth, factoring in the sale of Gold Strike Tunica. A consistent focus on optimizing profitability and sustained great customer service has led to this success. Also, Macau has seen outstanding quarterly performance and remarkable EBITDAR, positioning the company well for sustained growth.
Notably, BetMGM is on track to attain profitability in H2 2023. Also, MGM Resorts’ 37,000 rooms in Las Vegas facilitate BetMGM’s exposure to new customers daily. These synergies create a seamless experience through the BetMGM app across state borders.
The company’s future looks bright with developments such as potential licensing in New York by H1 2024 and advancements in Japan. This is bolstered by the thriving sports and entertainment scene in Las Vegas, which aligns with MGM Resorts’ plans for operating leverage growth. The balance sheet also has considerable strength, with more cash than debt and a significantly reduced share count, highlighting the company’s strong financial position. This is why I believe it is one of the best Michael Burry stocks.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
