Today’s Trade Ideas
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MGM Resorts International, trading at a market cap of $9.4 billion with a price to free cash flow of 7.3, has reduced its shares outstanding at an 8.4% annual rate for a cumulative reduction of 52.5%. The stock is still cheap today despite concerns around Las Vegas spending.
MGM Resorts International (MGM) is discussed as a strong share cannibal candidate with aggressive share buybacks over the past decade. Its low valuation metrics and significant share reduction strategy suggest a potentially undervalued opportunity despite market worries related to the casino industry. Audio Listen At 00:24:17 - 00:25:25
2. Adobe as a Future Share Cannibal Trade Call
My number one company is Adobe. They kind of have been ramping buybacks over the last couple of years as the threat from AI has knocked the stock down and led to multiple compression. Today, I think they have like a 7% or 8% buyback yield. But with stock-based comp, they are reducing total shares outstanding by about 5.5% annually.
Adobe (ADBE) is highlighted as a potential future share cannibal due to its increasing commitment to buybacks, consistent revenue growth of around 10% per quarter and a solid buyback yield in the high-single digits. Although historically not known as a share cannibal, recent dynamics, particularly due to AI-driven stock compression, present an opportunity if the stock remains undervalued. Audio 00:21:13 - 00:22:05
3. Buy Call on MP Materials at $82.50 Buy Point
And that $82.50 is the traditional buy point on this one. I do own a position in this. It rebounded off of the 21-day line, basically close to the 50-day line. Really strong reversal.
Ed highlights MP Materials as having made a strong rebound off key moving averages; he suggests that if the stock holds above the traditional buy point of $82.50, it could be an actionable buy signal. Audio Listen At 12:21 - 13:13