The Patient Investor

UNH: Opportunity in Insurance Through Call Spreads and Margin Recovery

"The final one, which is by far the most hated sector, is insurance, and the stock that I own is UNH, United Healthcare. Many of you asked, "What have you done on the dip?" and although I didnt buy the dip, I bought call spreads on UNH for June 2027, which are up about 74%. United Health fell significantly in 2025 due to underestimated medical costs, but they are addressing this by raising prices and exiting unprofitable plans. Their pricing strategy is intensely focused on margin recovery and moving back towards an earnings per share growth target of 13%. With strong cash reserves and a history of significant stock buybacks, I believe 2026 could be an amazing year for UNH."

The speaker presents United Healthcare (UNH) as a contrarian investment in the insurance sector. Despite a significant dip in 2025 driven by cost misestimations, UNH is repositioning itself through price hikes and plan exits to recover margins. The speaker has already capitalized on this by buying call spreads, which have appreciated dramatically, signaling a bullish outlook for 2026 supported by robust fundamentals and potential buybacks.

Adobe: Discounted Valuation Amid AI Narrative

"The second stock that I believe could outperform in 2026 is Adobe. Adobe is down 27.5% over the last 5 years and is now trading at 15.5 times forward earnings, which is unheard of for Adobe. The narrative that AI is killing Adobe doesnt hold up because the company is still growing revenues at 10 to 10.5% despite AI technologies like ChatGPT emerging. They mentioned AI 89 times in their investor presentation and are well ahead of their AI targets. With high margins, consistent earnings per share growth of around 12-13%, and stock buybacks reducing shares outstanding, I think Adobe is one of the cheapest stocks in the market and a comeback candidate for 2026."

The speaker argues that Adobe, despite being painted as a casualty of the AI revolution, remains fundamentally strong. Trading at a very attractive 15.5x forward earnings along with solid revenue growth and AI-driven product improvements, Adobe is positioned to benefit rather than suffer. Its high margins and share buyback program further add to its appeal, making it a potential major comeback story in 2026.

PayPal: Potential Rebound with Call Options and Valuation Reset

"The first one very hated stock is PayPal. PayPal is down 65% over the last 5 years. The sentiment is so bad on PayPal that its now trading at 12 times earnings, compared to trading at 60 times a few years ago. Yet, if you look at the active accounts, they have been growing every single quarter, by about 2 million each time, and total payment volume has been increasing almost every quarter. The decline in revenue growth from 9% down to 1% was temporary due to unprofitable contracts with Brainree, which the CEO cancelled to focus on profitable growth. Now, trading at a 12% free cash flow yield (roughly 10% after stock-based compensation), its a high margin business that can buy back 10% of its shares annually. I believe the potential for a massive change in sentiment in 2026 is huge."

The speaker outlines a contrarian opportunity in PayPal, emphasizing its drastic valuation compression from 60x to 12x earnings. Despite negative sentiment, key metrics such as growing active accounts and consistent payment volume indicate underlying strength. The temporary revenue slowdown due to Brainree contracts has ended and the strong free cash flow yield supports robust share buybacks, positioning PayPal for a sentiment reversal in 2026.

Uber Company Commentary: Mispriced Fundamentals Amid Bad Sentiment

"It's not only a bet on the future like autonomous vehicles, even delivery drones, which I believe are the future of the delivery business model, but even flying taxis like Jobby Aviation and anything you could think about for the future. It's a bat on all those things, but none of those things are priced in the stock as it's trading at 18 times cash flow, growing cash flow, 20% plus every single year. The stock has really bad sentiment. Whenever I'm going to talk about it here shortly, most of you are going to skip the video. You're going to tell me why are you talking about the stock? The company is dead. The company has no moat. But this sentiment with the combination of amazing fundamentals is what leads to explosive moves like the one we had on Google when AI was supposed to kill Google or ChatGPT, just like again AMD which I talked about when it was getting crushed and we saw how that happened."

The speaker highlights Uber's strong fundamentals despite negative market sentiment. He underscores that while investors dismiss the company as lacking a moat, the low valuation (18 times cash flow) combined with high growth in cash flow presents an explosive opportunity similar to past market mispricings in tech stocks.

Uber Trade Call: Buy the Dip Around $85

"Now, for me personally, I own Uber. I have a decent stake. I want to buy more. So, I'm in a good position to be a little bit more patient, I would say. So, for me personally, let's say I did not own Uber. If it was me, I would be maybe starting a position here and dollar cost averaging down. Again, not financial advice, but this is what I would likely do. But for me, because I have a stake in the company and because I'm seeing other opportunities, I think the ideal buy range, or I would say the price range where it is too cheap to ignore, is likely around $85 per share. So, if Uber gets to 85 or below, I'm going to be heavily buying the stock like a lot. And if it doesn't get there, I will likely be maybe buying small buys here and there to increase my stake. But I still love Uber over the next 5 years."

The speaker provides an explicit trade call for Uber, indicating he would aggressively increase his position if the share price falls to around $85. He cites the stock’s strong fundamentals and low valuation (18 times cash flow) as catalysts, and notes his long-term conviction in the company.

Valuation Attraction at 15x Free Cash Flow Amid Caution

"Now if we look at where this business is trading at, it's trading at 15 times cash flow. This is almost a value investment. I've seen articles saying that Salesforce right now is a value stock. Maybe it's not a value investment, but it's getting cheap, guys. I mean, 15 times cash flow for Salesforce is really crazy. It used to trade at 55 times a few years ago and a few months ago it was around 22-25 times. At 15 times, to me this is very interesting. Assuming they hit a 10% revenue growth, the free cash flow yield of around 6% could translate to a 15 to 16% annual return, with potential for a multiple reversion to 18-20 times."

The speaker notes that Salesforce is now trading at an attractive 15 times free cash flow, a significant reduction from previous multiples. Despite his reservations about management, he outlines a scenario where sustained organic growth and potential multiple expansion could deliver substantial annual returns, though he remains cautious due to historical performance issues.

Doubts on Salesforce 2030 Guidance and Management Track Record

+0.06%current return

"But the stock is finally going up because the company has issued 2030 guidance. Now, back in 2022 they issued guidance for 2026 and here we are in 2026 guiding for 41 billion. We are nowhere close to the guidance they gave back in 2022. So, if they could not meet their 2022 guidance for 2026, not even get close to it, why should we trust the 2030 guidance? I I'm personally not going for it. I I'm not trusting it. Maybe this time is different. But again, it's hard to trust the management team that has disappointed over and over and over again."

The speaker expresses skepticism about Salesforce's 2030 guidance given its history of missing previous targets. He highlights that despite recent positive movements, the management's track record makes him reluctant to invest, suggesting that he will avoid adding to his position in CRM.

Buying the Dip on Amazon Amid Undervaluation

+1.00%current return

"Now the second one which is a funny pick which is a competitor to Melly is Amazon and this is the ones that I own and it's been a disappointment. It's down 3% on the year. Every single stock is up even I believe Coke is up. Pepsi is up I think and and Amazon Amazon's down 3%. So, it's been a little bit of a disappointment, but this is some the times where you have to look at what Mr. Market is doing and you have to look at what the company's doing. And as the company is getting better, but the stock's going down and it's looking undervalued, then to me, this is an opportunity to be buying the dip."

The speaker discusses Amazon as a trade opportunity despite recent disappointing performance, with the stock down 3% while peers are up. Highlighting that the stock appears undervalued relative to its improving fundamentals, the speaker indicates that he has been buying the dip at around $175, viewing this as an opportunity to average down on a solid, multifaceted company.

Bearish Trade Call for Lululemon (LULU)

-5.40%current return

"The second one is Lululemon, which I told you guys to avoid in my last video. Its trading at $167 per share and down 55% year to date, with comparable sales dropping to 1% and a massive disappointment in guidance. The CEO even admitted that the company has become too predictable in its casual offerings, missing key trends. I think Lululemon has the potential to be a trap because you cant really predict consumer preferences, and personally, Im not touching it."

The speaker issues a bearish trade call on Lululemon (LULU), citing its significant decline (55% YTD), falling comparable sales, and acknowledged stagnation in product trends by the CEO. Despite the stock trading at an attractive valuation, the uncertainty around consumer trends and market dynamics makes it a potential trap, leading the speaker to avoid investing in it.

Bullish Trade Call for Adobe (ADBE)

+5.21%current return

"Adobe went from 35p and it used to trade around 50p, now trading at 14.8 times earnings. I think Adobe is presenting one of the best opportunities in the market and one of the most misunderstood opportunities, and the company believes its misunderstood because theyre using their free cash flow to buy massive quantities of stock and reduce shares outstanding. I used to be bearish on Adobe, but if AI is not killing Adobe as fast as people believe, I think 14 times earnings will likely end up being cheap and the stock could recover in a major way. So, I like Adobe very much over here."

The speaker outlines a bullish trade call for Adobe (ADBE), emphasizing its undervaluation at around 14 times forward earnings despite strong fundamentals, recurring revenue, and continued cloud growth. They highlight Adobes active share buybacks and potential multiple reversion if AI does not hurt its fundamentals, making it one of the best buying opportunities in the market.

Buy Meta if Price Falls Below 650

+4.71%current return

"Now, the first stock that I believe could do extremely well out of this pullback is Meta. Meta is down 6 and a half% on the month. Meta is just an amazing company with almost three and a half billion daily active people. I put in the current PE ratio for 2025 and I personally wouldn\'t pay much more than 23 times earnings. So, if Meta gets to 650 or below, I will likely start a position."

The speaker outlines a clear trade call on Meta. He highlights its strong fundamentals, huge user base, disciplined expenses and reinvestment strategy, and emphasizes that buying Meta at or below 650 is crucial to achieving his upside target. The commentary is supported by valuation metrics and growth expectations.

AMD Price Target Revision and OpenAI Partnership Catalyst

+19.56%current return

"AMD no longer stands for advanced money destroyer. I"m now calling it advanced money dispenser as a stock is up 26% on the open AI partnership. Based on my last video, I gave my price target of $370 per share. And in this video, I"m going to update it up to $500 per share after the partnership with Open AAI. I"m going to give you the details and tell you how I got this price target. The Open AI partnership is pretty much a gamecher as it could generate tens of billions of dollars of annual revenues for AMD."

The speaker updates the AMD price target from $370 to $500 per share, citing the OpenAI partnership as a major catalyst. He emphasizes the potential revenue generation, multi-year deal details, and the strategic use of dilution to secure a long-term partnership with OpenAI, positioning AMD for significant growth.

Company Commentary: Amazon Trading at a Discount with Growth Prospects

"The second one is Amazon... Amazon is trading at 14 times price to operating cash flow, which is pretty crazy for a mega cap... I still like Amazon, and despite its temporary operating cash flow deceleration, if it grows operating cash flow by 20% over the next few years, it is too cheap to ignore."

The speaker offers commentary on Amazon (ticker: AMZN), noting that it is trading at an attractive multiple relative to its operating cash flow despite underperforming compared to peers. Concerns over a slowdown in operating cash flow growth are mentioned, but the potential catalyst of improved AWS performance and a discounted valuation make it a compelling long-term hold.

Trade Call: Buy SoFi on Dip for Strong Growth and Margin Expansion

+15.00%current return

"The first stock which I haven't talked about in a while is SoFi. SoFi is down 7% over the last 5 days... I bought the dip on August 20th at $21 and now it's sitting at 25... I might even average up at $25 because I believe the stock is just extremely undervalued relative to the potential... fundamentals have also improved a lot and earnings per share should be up 150% going into 2026."

The speaker outlines a strong buy case for SoFi (ticker: SOFI), emphasizing its rebound from previous lows, improved fundamentals, and multiple tailwinds including fee-based revenue growth, potential upside from crypto re-entry, and a favorable housing market environment. The call is to buy or average up on dips given its attractive valuation relative to future earnings and margin improvements.