1.
$Advanced Micro Devices(AMD)$ data center revenue grew 60% YoY last quarter.
Microsoft partnered with AMD to use its AI chips in Copilot’s inference workloads for its cost efficiency.
Meta’s Llama runs live inference traffic exclusively on AMD chips.
Yet, AMD is trading at just 21 times forward earnings.
Meanwhile companies like Walmart are trading at 36 times forward earnings.
AMD is criminally undervalued.
Image
2.
$Oscar Health, Inc.(OSCR)$ is a 5x opportunity everybody ignores.
Revenues are exploding, it has just become profitable, and it's trading at just 6 times 2027 earnings ⎯ and Michael Burry is buying too.
Here is why it's an asymmetric opportunity now: 🧵
Image
1/ OSCR is disrupting the US healthcare system.
The US has some of the best hospitals in the world.
Yet, Americans have lower life expectancy than the French, Germans, and Japanese...
This is because it's a very expensive health care system.
2/ OSCR is on a quest to revolutionize this broken system.
It built a direct-to-consumer health insurance platform.
Its mobile application manages onboarding, benefits, and claims.
This model reduces agency costs and enables it to offer cheaper premiums.
Image
3/ It leverages the Affordable Care Act (ACA) marketplaces.
It focuses on two groups:
- ACA eligible individuals.
- Small and medium businesses through individual coverage health insurance reimbursement (ICHRA).
This is a huge market of 96 million people with a total size of $720 billion.
OSCR created a product specifically for this market.
Image
4/ It has a distinct strategy called "Total Cost of Care."
Rather than avoiding client activity at all costs, as traditional insurers do, it prompts clients to take small actions to prevent big future claims like surgeries.
Every client gets a personalized concierge and nurse that they can directly message through the Oscar app. They personally track clients' routine check-ups, drug fulfillment, and chronic diseases.
Its strategy is to keep them healthy.
This aligns interests, and clients love it.
It has an industry-leading net promoter score of 66!
Image
5/ This strategy is working.
Its claims costs are increasing at a slower rate than medical CPI, as it does a better job of keeping its clients healthy.
This allows it to keep prices low and win clients.
Image
6/ Result? Revenues are exploding...
It grew revenues from 391 million to $9.1 billion in just 5 years ⎯ it has become profitable!
This is an amazing performance that even the most cutting-edge software companies would struggle to replicate.
Image
7/ Its financial position is also rock solid.
It currently has $1 billion in equity against just $373 million in debt.
Its total cash position is $770 million bigger than regulatory requirements.
This means that it can deploy nearly $800 million for strategic expansion
Image
8/ It also has substantial room for margin expansion.
Share of SG&A expenses in revenue is currently about 19%, while the management targets 16% by 2027.
It also expects to cut the medical loss ratio to 80%.
This will result in above 5% operating margin, way higher than industry peers.
Image
9/ There are two substantial risks:
- Repeal of ACA
- Expiration of enhanced subsidies.
Repeal of the ACA would be destructive, but Trump said he won't repeal the ACA but reform it.
If enhanced subsidies expire at the end of this year, premiums will increase, ACA enrollments will decline, and $OSCR performance will slow down, but it won't be existential.
Image
10/ Valuation is attractive.
The management expects 20% revenue CAGR until 2027 and $2.25 EPS.
Even if it just achieves $1.5 EPS in 2027, at 15 times earnings, it'll be worth $22.5 a share.
Discounting it back to now at 10%, we get a fair value of $16.90 a share.
It's currently trading at $12.23, a 25% discount to the intrinsic value calculated based on conservative assumptions.
Image
Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
For whom haven't open CBA can know more from below:
Find out more here：
Comments