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Michael Bur is officially back. I haven't talked about him in a long time. Initially got popular on YouTube for analyzing his GEO investment. Some of you guys might remember me from the 21 22 days and I explained how Gio was trading below liquidation value and it was a very successful investment back then.
Still is by the way. It's very very cheap right now. But now Michael Bur is very excited about four new stocks. Lululemon, Molina Healthcare, Shift for Payments, and another mortgage stock if I'm not mistaken. So, I'm going to analyze two of them in today's video, and I'm going to try to keep it short.
So, I really hope you enjoy it as always. The first one is Lululemon, and I'm not going to spend a lot of time on this one. It's down 50% over the last 5 years. It's even down like 43% over the last 6 months alone. Lululemon is suffering from the worst thing that any, you could say, gross company or an apparel stock can suffer from.
And this is a massive deceleration in revenue growth. Revenues used to grow 30%, it went down to 24, 18, 10%, 7%, 3%. It's expected to go negative in Q1 of 2026. Same thing with comp sales. They decelerated a lot. And this is the worst thing that can happen to a gross stock in general. And this is why it gets an aggressive repricing.
Now, normally whenever I have a retailer like Lululemon and other retailers reporting bad earnings, deceleration in growth, I want to figure out if this is a temporary problem or if this a permanent problem. If it's a temporary problem, then it has likely to do with the economy being weak. And maybe that's why Lululemon is not doing so well.
But maybe it also has to do with the brand of Lululemon deteriorating. Now if I look at the mix of revenues on a geographical basis for Lululemon, United States revenue has been pretty much flat and we know we don't have the best economy in the United States. Now on the other hand, the China's revenues have grown a little bit but nothing too crazy.
Other revenues have also grown, nothing too crazy. Canada's revenues has pretty much been flat. So there's very little change in general in terms of revenue growth for the company in different areas. Now for me personally, I don't believe this is a problem with the economy. I think this is a problem with Lululemon itself.
And I'm not the only one saying that the CEO of Lululemon, he's saying it himself. He's saying we have become too predictable within our casual offerings and have missed opportunities to create new trends. our lounge and social products offering have become stale and have not been resonating with the guest.
He's 100% right and that's why you're seeing more of aloe kind of pants and other kind of workout clothing and outfits and all these kind of things because it's very tough to be in this industry and that's why I don't like to invest in the apparel stocks in general is because you cannot predict the consumer demand and consumer preferences.
So let's say Lululemon is popular today. Tomorrow some influencer goes viral on Tik Tok wearing some kind of new cool pants from China or wherever they're from and then everyone wants to copy the influencer and everyone wants to copy each others and they all copy each others and this is how you have a new trend and then Lululemon could be suffering and it's not even the problem of Lule Lemon.
It's not even their own mistake. It's just the consumer has changed their preference and they suddenly like something else. It's very hard to predict those things, but I do believe the CEO and the management have made a mistake. They have not been innovating. Their products have been the same for a while and a lot of people are trying something new.
And Lmon is being left behind and it's very hard to reverse the trend. But looking at the valuation, it's now trading at 15 times earnings. Guys, 15 times earnings is dirt cheap for a company like Lur Lemon. Used to trade at 70 times. Now trading at 15 times. So I believe a lot of the bad in Lululemon is priced in especially as the company is expected to return to growth in 2027 which is mainly late 2026 around 9% earnings per share growth and 10% the year after that you're paying 15 times for that is really not bad at all and the company the management team have been taking advantage of that by buying back a lot of stock reducing shares outstanding to create long-term value per share for a lot of shareholders.
So, I personally believe Lululemon is more than fairly priced over here. I believe a lot of the bad is likely priced in. I think there's more that could go right that could could go wrong. But if it was me personally, I would much rather pay 20 or 19 times for Meta where it's trading at right now versus paying 15 and a half times for Lululemon.
Meta was trading at 19 times like two or three days ago and Lululemon is at 15. There's many different opportunities way better than Lululemon, not as cyclical. So, I believe Lululemon is fairly priced. I don't believe it's a generational buy. I don't believe it's a buy of the century. I think it's very attractive at 15 times, but I also believe there's way better opportunities in the market.
And I believe the second stock that I'm going to talk about is a little bit better and much more attractive than Lululemon in my opinion. And by the way, I'm using fiscal.ai to come up with all those charts. If you want to try it out, they give you 30% off right now if you use my link down in the description.
Now the other one that I really like very much personally is shift for payments ticker symbol four. The stock is down 35% here to date. It's been doing really really bad. But the interesting part about it is the insiders have loaded up a lot of shares at a much higher price about $16 million around $81 to $83 per share.
And today the stock is sitting at about $71 per share. So, if you're buying the stock today, you're paying about $11 less than what the insiders have paid. And it was not a small buy, you know, around $82 or $83. To me, this is a very interesting setup in general. But Shift 4 is a payment processor.
You could say kind of like Ferrer. Fiser has been a disaster. It's down 70% year to date and it's dragging a lot of good companies with it, including Shift for Payment. There's really bad sentiment around the payment processors in general, but I believe shift four is a very interesting one. They're number two in payment processing at the restaurants right after toast.
I believe the first one in hospitality in the United States, the first one in sports and entertainment in the United States. So you could say we have the World Cup tailwind which is not priced in for 2026. Number one in luxury retail globally in terms of processing which is huge. And this is mainly after the latest acquisition which gives them a lot of exposure to luxury retailing in general.
Now again this selloff to me is very weird because if you look at the latest report they grew revenues 29 a.5%. So revenue growth has reacelerated in a major major way. Earnings per share was negative89 in 2021. Now it's positive $545 and it's expected to be 673 next year in 2026. So the company is doing everything right.
Everything is improving but the stock is going down and it's really hard to find a reason why volumes are going up and gross profits are getting better but the stock is just going down. But I believe there's one main reason why the stock could potentially be going down other than the sentiment with of Fiser which is bringing down a lot of stocks.
I think there's another reason and this reason is slower organic growth. So the way the company measures organic growth I believe is they use gross revenues less network fees. Okay, this quarter they grew 61% in terms of this metric. But if you exclude the latest acquisition the growth was only 18%.
And before this acquisition shift 4 has been decelerating in revenue growth. It used to grow 34% it decelerated to 25 19 then it had the acquisition and they jumped back to 29%. Now they were also decelerating due to a weaker economy. So luxury spending is not big now right now you know sports in general is not too big.
Restaurants are slowing down. All the restaurant stocks are down 20 30 40 50 even 70% year to date. So we don't have the best economy. It's waiting on the revenue growth of the the company in general. But this is the thing with the payment processors even Fiserf does a lot of acquisitions because it's hard to grow organically in terms of a payment processing company because if you're processing payment either you have to expand organically which is hard because it's not easy to move payment processors from a business.
So this is a very sticky revenue. So it's hard to do that unless the economy kind of expands and luxury retailing is booming and everything is booming which is not the case right now. The best way to grow is through acquisitions and acquiring other payment processors that are already deeply integrated within different retailers.
And to do that, you need some debt and you have to take on some risks and uh and maybe the analysts are saying that the company is highly dependent on acquisitions and now they're doing well and they've been doing well, but will they be able to keep finding and integrating those acquisitions successfully?
Maybe the analysts are not sure and that's why the stock is going down. Now, in terms of the company in general, this is a $4.8 billion market cap. Enterprise value is $9.6 billion, almost double the market cap. So, the company clearly has a lot of debt. In fact, the debt level has skyrocketed recently.
They have 4 billion in long-term debt, about 700 million in current debt, and they have about $1.8 billion in cash and cash equivalent. Now, the debt for me personally is really not concerning because it's well spread out. For 2025, they have $700 million due. 2026, only $10 million. 2027, they have $642 million.
And after 2027, it's well spread out. There's around $3.4 billion due. So, there's nothing that's due anytime soon, and I'm not really concerned about it. The company still has 1.7 billion in cash for them to pay it off and they can even potentially do more acquisitions and expand the revenues even more in terms of revenue growth.
But free cash flow is also robust. It's very very sticky, very sticky, guys. 511 million for 2025. They're expected to put up 685 for 2026 and about $800 million for 2027. So, I'm really not worried about Zudet at all. I don't believe it's concerning and I hope the company starts reducing shares outstanding very soon to create value for long-term investors.
In fact, they did announce a $1 billion buyback program which I believe is about like more than 20% of the market cap around 20% of enterprise value actually. So this is a good buyback program and it's going to help create value for shareholders. Uh in terms of the valuation, it's trading at 11 times earnings.
11 times earnings is dirt cheap for a company like Shift 4 with such sticky recurring revenue. Uh not recurring revenue, you could say very sticky uh revenue stream in general and they're deeply integrated. It's hard to move payment processors in general. So I believe 11 and a half times earnings is undervalued for a company that has been growing earnings per share about 80% this year in 2025.
Expected to grow 23% 2026 and 20% for 2027. So I I believe it's undervalued and I like it to be honest much more than Lululemon. But if I really had to choose I wouldn't even buy any of them and I would be buying maybe Meta or Uber on this sell off and many different stocks that are much more interesting than Shift 4 in my opinion.
But that was my opinion on the two Michael Bur stocks. If you want me to analyze Molina Healthcare and other stocks, please let me know down in the comment below. So, thank you for watching. It was not financial advice. Hope you enjoyed it. If you did enjoy it, please press the like button and maybe consider subscribing. So, I'll talk to you in another
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