We recently published a list of Top 10 Stocks to Buy According to SRS Investment Management. In this article, we are going to take a look at where Burlington Stores, Inc. (NYSE:BURL) stands against other top stocks to buy according to SRS Investment Management.
SRS Investment Management is a New York-based investment firm founded in 2006 by Karthik Sarma. The firm focuses on diverse investments across industries, including technology, media, telecommunications, consumer goods, and industrial sectors. It employs a research-driven approach to identify promising opportunities in global markets, leveraging its expertise to navigate complex financial landscapes.
As an investment advisory firm, SRS provides detailed insights into its business practices through its regulatory disclosures, although these are not verified by the SEC or state securities authorities. The firm emphasizes thorough due diligence when evaluating potential investments, gathering information on a company’s products, services, and market position. Its analytical approach includes engaging with industry experts, assessing supply and demand dynamics, and constructing financial models to project future performance and returns.
SRS primarily follows a global long/short equity strategy, aiming for high risk-adjusted returns while prioritizing capital preservation. The firm diversifies its investments across multiple industries and regions to mitigate risks. Its investment process involves extensive fundamental research, disciplined portfolio management, and strategic positioning in both long and short positions. This approach enables SRS to capitalize on market inefficiencies and generate sustainable returns.
Additionally, the firm runs a Focused Investment Program, targeting undervalued securities and acquiring significant positions at favorable prices. This strategy relies on active shareholder engagement, where SRS seeks positive responses from company management and stakeholders to influence corporate actions. The effectiveness of this strategy depends on how the market reacts to these initiatives and the willingness of companies to adopt changes proposed by shareholders. Through its meticulous investment approach, SRS aims to drive long-term value creation for its investors.
Karthik Sarma is an Indian billionaire hedge fund manager and the founder of SRS Investment Management, which he launched in 2006 after five years at Tiger Global Management. With a strong background in finance and investment, Sarma has also served as a director on Avis’s board since 2020, playing a key role in its strategic decisions. His educational background includes a bachelor’s degree from the Indian Institute of Technology Madras and a master’s degree from Princeton University. His professional journey began with three years at McKinsey & Co. as a consultant, where he gained experience in business strategy and financial analysis. He later joined Tiger Global Management, where he worked as a Managing Director from 2001 to 2005, honing his expertise in hedge fund management before establishing SRS Investment Management. Sarma’s ability to identify and capitalize on investment opportunities has positioned him as a highly influential figure in the hedge fund industry.
As an immigrant who moved to the United States for graduate studies, Sarma has built a reputation as a strategic investor with a disciplined approach to fund management. His experience across consulting, investment management, and corporate governance has contributed to his firm’s success. Through SRS, he continues to influence the financial landscape, focusing on long-term value creation for investors while maintaining a strong presence in key industries.
As of its latest filing for the fourth quarter of 2024, SRS Investment Management reported overseeing approximately $7 billion in 13F securities. The firm’s investment approach remains highly concentrated, with its top ten holdings accounting for 92.05% of total assets. This level of concentration suggests a high-conviction strategy, where SRS invests heavily in a select group of companies it believes offer strong long-term growth potential.
Our Methodology
The stocks discussed below were picked from SRS Investment Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Burlington Stores, Inc. (BURL) the Top Stock to Buy According to SRS Investment Management?
Women in fashionable clothing walking together down a busy city street.
SRS Investment Management’s Equity Stake: $362.15 Million
Burlington Stores, Inc. (NYSE:BURL), a leading off-price retailer, delivered strong financial results for the fourth quarter and fiscal year 2024, exceeding expectations in several key areas. The company reported a 6% increase in comparable store sales for Q4, outperforming its guidance range of 0% to 2%. Total sales for the quarter grew by 10%, reflecting strong consumer demand and effective inventory management. Burlington’s gross margin improved to 42.9%, an increase of 30 basis points from the previous year, while its adjusted EBIT margin expanded by 10 basis points to 11.1%. Adjusted earnings per share (EPS) reached $4.13, marking a 12% year-over-year increase, demonstrating the retailer’s ability to drive profitability while maintaining its value-oriented strategy.
For the full year 2024, Burlington Stores, Inc. (NYSE:BURL) achieved an 11% increase in total sales, reinforcing its position as a high-growth retailer in the off-price segment. Operating margins expanded by 100 basis points, reflecting improved cost efficiency and disciplined expense management. The company aggressively expanded its store footprint, opening 147 new locations and adding 101 net new stores, further solidifying its presence across 40 states and Puerto Rico. Effective inventory management played a crucial role in Burlington Stores, Inc. (NYSE:BURL)’s success, with comparable store inventories down 3% year-over-year, leading to faster inventory turnover and a fresher product assortment for customers.
Burlington Stores, Inc. (NYSE:BURL) ended the fourth quarter with a strong financial position, holding $995 million in cash and $1.8 billion in total liquidity, providing ample flexibility for continued investment. The company repurchased $61 million in shares during the quarter, with $263 million remaining under its current repurchase authorization. Looking ahead to 2025, Burlington expects a total sales growth of 6% to 8% and comparable store sales growth between 0% and 2%, reflecting a more normalized post-pandemic retail environment. Adjusted EPS is projected to be in the range of $8.70 to $9.30, supported by continued margin expansion and strategic investments in growth. Capital expenditures for 2025 are expected to reach approximately $950 million, emphasizing the company’s commitment to store expansion, supply chain enhancements, and technology investments.
Overall, BURL ranks 7th on our list of top stocks to buy according to SRS Investment Management. While we acknowledge the potential for BURL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BURL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
