Companies constantly seek innovative ways to secure their financial futures and ensure sustained value growth in the business landscape. This article delves into the strategies of three distinct companies. Each thrives in their unique sectors through strategic partnerships and forward-thinking initiatives.
The first one is at the forefront of the energy storage revolution, driven by the global shift towards electric vehicles (EVs). Its strategic agreement with an automotive leader to supply lithium cements its role in the EV supply chain.
On the other hand, the second one explores the experiential real estate landscape through collaborations with wellness resorts, aiming to revolutionize how we experience leisure and hospitality. Meanwhile, the third healthcare company is growing through value-based care partnerships and innovation in the Medicare and marketplace segments, ensuring quality healthcare for millions.
Overall, this article unravels the fundamentals of these companies and corresponding value stocks. It showcases strategic alliances’ power in driving success and securing a prosperous financial future for investors.
Albemarle (ALB)
The adoption of EVs primarily drives the energy storage sector, being the key growth driver for Albemarle (NYSE:ALB). The transition to electric mobility is a global trend, and automakers plan to accommodate this shift.
One of the most concrete indicators of Albemarle’s growth potential is its strategic agreement with Ford (NYSE:F) to supply over 100K metric tons of lithium hydroxide over five years in 2026. This agreement signifies the scale of Albemarle’s operations. It’s important to note that supplying a significant amount of lithium to a major automaker positions Albemarle as a crucial part of the EV supply chain.
Notably, meeting the increasing demand for lithium and related materials used in energy storage solutions requires significant capacity expansion. Albemarle’s focus on expanding its capacity to meet long-term demand is a critical indicator of its growth potential. In this direction, Albemarle’s Salar Yield Improvement Project reached mechanical completion on schedule. Similarly, the Meishan project in China is ahead of schedule, with mechanical completion expected in early 2024. Being ahead of schedule signifies Albemarle’s capability to manage complex projects effectively.
Albemarle’s global presence and vertical integration in the lithium supply chain are strategic advantages. That global footprint allows the company to access diverse markets and leverage low-cost resources in Australia and the Americas. The company’s ability to source raw materials and efficiently manage the entire production process gives it control over its supply chain.
Therefore, the expansion projects in Chile, Australia and China demonstrate the company’s ability to navigate the global landscape. Finally, maintaining 100% ownership of key assets gives Albemarle control and flexibility.
VICI Properties (VICI)
Strategic partnerships are key to long-term growth for VICI Properties (NYSE:VICI). Notably, the company has entered into an expanded growth partnership with Canyon Ranch, a renowned brand in the place-based wellness sector. VICI Properties is making an up to $150 million preferred equity investment in the Canyon Ranch operating company. That investment supports the expansion of Canyon Ranch’s operating and digital platforms and enhancements to its Tucson and Lenox assets.
Additionally, VICI intends to provide approximately $140 million of mortgage financing secured by Canyon Ranch Tucson and Canyon Ranch Lenox to refinance Canyon Ranch’s existing CMBS debt. Fundamentally, this move enhances Canyon Ranch’s financial stability and frees up resources for further expansion. VICI Properties gains the ability to convert its existing purchase options on Canyon Ranch Tucson and Canyon Ranch Lenox into call rights. Also, these call rights allow VICI to acquire the real estate assets of these properties in the coming years.
Furthermore, VICI may provide up to $200 million in development funding for Canyon Ranch Austin, scheduled to open between 2025 and 2026. Importantly, this commitment includes a right to own the real estate upon stabilization.
Overall, VICI Properties and Canyon Ranch are jointly developing a strategy to identify and acquire conventional resorts with conversion potential into new Canyon Ranch resorts. Canyon Ranch would operate the resorts in this scenario, while VICI would own the resort real estate under long-term triple net leases.
Therefore, this strategy leverages Canyon Ranch’s expertise in wellness and hospitality to enhance the value of VICI’s real estate assets. Lastly, by supporting the expansion and conversion of wellness resorts, VICI Properties positions itself as a pivotal player in the evolving landscape of experiential real estate.
Centene (CNC)
Centene (NYSE:CNC) is a healthcare company that operates in various segments, including Medicaid, Medicare and the marketplace.
In the Medicare segment, Centene’s membership reached 1.3 million, with approximately 47% of Medicare Advantage lives associated with value-based care (VBC) arrangements. The increase in VBC partnerships adds to the company’s potential for growth. For instance, Q2 2023 results reflected slightly higher outpatient claims experience in May, which the company expects to address in its 2024 bids. While there may be pockets of slightly higher Medicare utilization in the back half of the year, Centene’s 2023 adjusted EPS guidance considers this.
On the other hand, the Stars program, which measures the quality of Medicare plans, is a significant factor in Centene’s Medicare business. While there may be challenges in achieving 4-star plans, Centene expects solid overall contract progression, especially in admin ops and pharmacy measures.
The company is focusing on reaching 3.5-star plans by October 2025. That aligns with its strategy of serving complex and dual-eligible members. Also, performance in call volumes, admin and ops metrics, member satisfaction scores and network expansion are all positive signs of Centene’s progress in the Stars program.
Additionally, the company continues improving and aims to pull up underperforming contracts. As a result, it is working toward delivering economic value to Medicare in the long term.
On the other hand, Centene’s Ambetter Health franchise within the marketplace segment has been a strong growth driver. Centene has exceeded its previous projections with about 3.3 million members at the end of the quarter.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
