Michael Burry Keeps Buying This Stock
Summary
Joseph Carlson After Hours analyzes three prominent stocks that are currently experiencing dramatic price dips: Lululemon, Intuitive Surgical, and Adobe. Joseph Carlson After Hours notes that Lululemon has fallen over 50% year-to-date, transforming from a high-growth favorite into a 'turnaround play' favored by investors like Michael Bur. Joseph Carlson After Hours believes the core brand remains strong despite poor management decisions and marketing failures, such as ineffective advertising campaigns. Joseph Carlson After Hours highlights that the forward PE of 11.9 and aggressive share buybacks (potentially increasing to 10% annually) make it a compelling value play.
In the medical sector, Joseph Carlson After Hours discusses Intuitive Surgical, describing its business as a 'printer and ink' model where the installation of surgical systems drives high-margin recurring revenue from instruments and services. Joseph Carlson After Hours observes that while growth has slowed from 20% to 13%, the valuation has compressed to a more reasonable forward PE of 31.
Regarding Adobe, Joseph Carlson After Hours argues that the stock is unfairly priced like a legacy industrial company with a forward PE below 10. Joseph Carlson After Hours points out that Adobe has not missed earnings estimates in 14 quarters and expects another beat this week. Beyond stocks, Joseph Carlson After Hours discusses the Tesla Cyber Cab event, suggesting that Uber's business model is not 'cooked' because human drivers are still necessary to handle peak variable demand that robotaxi fleets cannot efficiently manage. Joseph Carlson After Hours also addresses the 'fail of the week' involving hikers who blamed Google Gemini for getting lost, concluding that user error was the true culprit.
Mentioned Stocks
Reasoning: Joseph Carlson After Hours states that Adobe is currently priced for destruction with a forward PE below 10, despite having a strong free cash flow yield of 8.5% after dilution. Joseph Carlson After Hours emphasizes that the company has a perfect track record of beating earnings estimates for 14 consecutive quarters and suggests that the fears of AI disruption are already fully baked into the low stock price.
Reasoning: Joseph Carlson After Hours praises the business model of selling surgical systems and generating recurring revenue through disposable instruments and maintenance. While Joseph Carlson After Hours views it as a high-quality business, the growth deceleration from 20% to 13% is noted as the reason for the recent 36% price decline. Joseph Carlson After Hours currently views the PE of 31 as more reasonable but is still studying the stock for a deeper dive.
Reasoning: Joseph Carlson After Hours highlights that the stock is trading at a forward PE of 11.9, which is extremely low for a high-quality brand. Joseph Carlson After Hours points out that Michael Bur (Burry) has made this his largest personal position, with a cost basis around $177 and a stated intent to 'load the truck' below $150. Joseph Carlson After Hours believes that if management fixes the marketing and product design issues, the stock could see a massive turnaround similar to Abercrombie or Ralph Lauren.