While you should never invest based on any one metric or person’s guidance, a possible exception can be made for Michael Burry stocks. Granted, you still need to conduct your own due diligence. Still, the reclusive hedge fund manager tends to win big with his contrarian trades.
Of course, we all know Burry from his exploits featured in the book and film “The Big Short.” However, the investment genius – who also holds a medical degree from Vanderbilt – has made many other picks as well. Indeed, he was investing in meme stocks before that term even materialized. In other words, he knows how to read the market.
Now, I’m not going to say that he’s 100% correct – no one has that kind of record. However, he definitely knows his stuff. Below are several Michael Burry stocks to consider.
Alphabet (GOOGL)
Based on the latest 13F disclosure documents, technology giant Alphabet (NASDAQ:GOOGL) represents 5.2% of the hedge fund manager’s portfolio. Now, whether it ranks as one of the Michael Burry stocks or not, GOOGL is a compelling enterprise. Primarily, its ownership of the internet through its Google search engine (along with the ecosystem) makes Alphabet a formidable investment.
To be sure, GOOGL probably won’t make you rich overnight. However, it’s a solid idea for the long haul thanks to its consistency. Last fiscal year, the company’s average positive earnings surprise came out to 6.7%. Its best performance was in the first quarter, when it posted earnings per share of $1.17 against a target of $1.07.
For the current fiscal year, analysts are targeting EPS of $6.82, a significant bump from last year’s result of $5.80. On the top line, they’re looking at revenue of $342.8 billion, up 11.4%. In fairness, GOOGL is a bit pricey at 6.39X trailing-year revenue. Still, it carries a strong buy rating with a high-side price target of $185.
Citigroup (C)
An intriguing idea among Michael Burry stocks, Citigroup (NYSE:C) makes up 5.4% of the hedge fund manager’s portfolio. The financial sector has operated under a skeptical cloud considering last year’s regional banking crisis. However, the series of better-than-expected jobs reports could favor the major financial institutions. More people having jobs means that rate hikes might not be coming soon, potentially improving lenders’ profitability.
Citigroup in particular has benefited from its consistent performance. In the past four quarters, the company’s average positive earnings surprise clocked in at 17.4%. Notably, the company’s Q1 print was impressive, producing EPS of $1.58 against a consensus view of $1.23.
For fiscal 2024, analysts are now looking at EPS of $5.77. That’s a solid improvement over last year’s print of $5.52. On the top line, revenue could hit $80.41 billion, up 11.2% from 2023’s tally of $72.32 billion. Also, the high-side sales estimate calls for $81.2 billion.
Lastly, it’s worth noting that Citigroup offers a forward yield of 3.72%.
Oracle (ORCL)
Operating under the infrastructure software industry, Oracle (NYSE:ORCL) offers products and services that address enterprise information technology (IT) environments worldwide. It’s one of the Michael Burry stocks possibly due to underlying artificial intelligence investments. Oracle’s cloud service is incorporate generative AI to offer utility across a wide range of use cases.
Right now, ORCL represents 5.6% of Burry’s portfolio. Admittedly, it’s not the most exciting idea in terms of financial performances. However, the company’s average positive earnings surprise came out to 3.23% in the past four quarters.
For fiscal 2024, covering experts are looking for EPS of $5.59, above last year’s result of $5.12. On the revenue front, they believe the company is capable of ringing up $53.25 billion. That’s up 6.6% from last year’s haul of $49.95 billion. Notably, for fiscal 2025, the consensus projection calls for sales of $57.7 billion.
Overall, analysts rate shares a moderate buy with a $138.61 price target, implying almost 17% upside potential.
Amazon (AMZN)
Practically pioneering the e-commerce business model, Amazon (NASDAQ:AMZN) has blossomed into myriad other innovation spheres. Some would also call the company controversial for effectively dominating the business landscape, putting smaller companies out of business. Still, Wall Street isn’t a place to make friends. It’s also one of the Michael Burry stocks, representing 4.8% of his portfolio.
While AMZN is no longer the exciting new tech name to speculate on, it still offers tremendous relevance. Perhaps most notably, e-commerce as a percentage of total retail sales has steadily increased since Q2 2022. That’s despite the consumer headwinds of inflation and elevated borrowing costs. So, that puts Amazon in the driver’s seat. Last fiscal year, its average positive earnings surprise shot up to 55.15%.
For fiscal 2024, analysts are looking for EPS of $4.13 on revenue of $641.35 billion. That’s a notable improvement across the board compared to last year’s results of $2.90 EPS on sales of $574.78 billion. To no one’s shock, experts rate AMZN a unanimous strong buy.
Star Bulk Carriers (SBLK)
A shipping company, Star Bulk Carriers (NASDAQ:SBLK) engages in the ocean transportation of dry bulk cargoes worldwide. Per the company’s public profile, its vessels transport a range of bulk commodities, including iron ores, minerals and grains, bauxite, fertilizers and steel products. Should the global economy improve, SBLK could be one of the top-performing Michael Burry stocks.
Right now, SBLK stock represents 4.9% of Burry’s portfolio. Given the reclusive market expert’s penchant for thought-provoking tweets (often with a downcast tone), the acquisition of Star Bulk is a curious one. Last fiscal year, the company posted an average positive earnings surprise of nearly 7%. However, the performance is volatile, badly missing in Q2 while knocking it out of the park in Q1 and Q3.
Looking ahead to end of fiscal 2024, analysts see EPS of $4.04. That’s a significant increase from last year’s result of $1.84. Also, the top line could expand 6.3% to $1.01 billion. And in the following year, revenue could hit $1.12 billion, implying nearly 11% up from projected 2024 sales.
JD.com (JD)
A Chinese e-commerce company, JD.com (NASDAQ:JD) represents one of the two massive business-to-consumer online retailers in China by transaction volume and revenue. However, there are concerns about the underlying market’s economy. As a result, JD stock suffered a decline of almost 8% since the beginning of the year. Over the past 52 weeks, it’s down more than 33%.
Still, I would classify JD.com as more of a classic example of Michael Burry stocks. Should China’s economy perform better than expected, JD could rise substantially. Providing some hope for this narrative is the company’s earnings performance last year. In the past four quarters, it posted an average positive earnings surprise of 20.13%. That’s impressive.
For fiscal 2024, analysts are looking for EPS of $3.16, a solid improvement over last year’s print of $3.06. Revenue may land at $160.13 billion, up 6.9% from 2023’s tally of $149.84 billion. Experts also peg JD stock a moderate buy with a $37.97 price target, implying 51% upside potential.
Alibaba (BABA)
Another Chinese e-commerce and technology juggernaut, Alibaba (NYSE:BABA) is essentially its home nation’s flagship enterprise. Invariably, then, it commands much attention from Wall Street. It also happens to be the top idea for Michael Burry stocks. Right now, it represents 6.1% of the investor’s portfolio.
Fundamentally, it’s another classic example of what Burry typically targets: underappreciated ideas with significant upside potential. However, prospective investors face notable challenges. In particular, BABA stock suffered a loss of 8% since the start of the year. Over the past 52 weeks, it has lost 28% of equity value. Whether it recovers depends of course on the trajectory of the Chinese economy.
With that in mind, the company provides some encouragement with generally solid performances. In the last fiscal year, its average positive earnings surprise came out to 8.38%. For the current year, analysts are seeking EPS of $8.64 on revenue of $130 billion. That’s a solid improvement from last year’s results of $7.64 EPS on sales of $121.63 billion.
Finally, analysts rate BABA a strong buy with a $104.49 price target, implying almost 52% upside potential.
On the date of publication, Josh Enomoto did not have (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.