Michael Burry gained fame by betting against investments. He was featured in The Big Short book and movie for shorting the subprime mortgage market. Burry has taken highly publicized short positions on Tesla stock. Earlier this year, he bet against the S&P 500 and Nasdaq-100.

But the well-known investor doesn't always bet against the market. He's bullish on quite a few stocks. Here's the Michael Burry stock that could be the biggest winner over the next five years, in my opinion. 

A contrarian collection

You can easily find every stock that Burry's Scion Asset Management owns by looking at the private investment firm's 13-F filings to the U.S. Securities and Exchange Commission. As of June 30, 2023, Scion's holdings include nearly 30 stocks, a handful of exchange-traded funds (ETFs), and put options for a couple of S&P 500 and Nasdaq-100 ETFs. 

Don't expect to see any of the widely followed, high-flying stocks of 2023 on the list. There's no Nvidia -- and definitely no Tesla -- shares in Burry's portfolio.

What you will find, though, is a contrarian collection of stocks with attractive valuations. Many of them have been beaten down quite a bit. That isn't surprising considering that Burry's investment approach is based on the value investing lessons espoused by Benjamin Graham and David Dodd. He has stated in the past, "All my stock picking is 100% based on the concept of a margin of safety."

Most likely to succeed

I think that several of Burry's stocks could be long-term winners. But one especially stands out to me: CVS Health (CVS -0.22%). Shares of the pharmacy giant have plunged more than 35% since early 2022. However, there are several reasons to like CVS.

The first one won't come as a shock. CVS Health is a bargain right now. Its shares currently trade at a forward price-to-earnings ratio of only 8.1x. I don't think that this low valuation reflects the company's underlying business strength and growth prospects.

CVS Health's revenue increased by more than 10% year over year in its latest quarter. Sure, adjusted earnings declined from the prior-year period. However, that was mainly due to the impact of COVID-19. Medical costs for CVS's Aetna health insurance business were up due to higher utilization as fears about COVID waned. The company's retail pharmacy business was impacted by fewer COVID vaccinations and tests. These negative year-over-year comparisons are only temporary issues, though. 

I believe that the aging U.S. population presents a significant long-term tailwind for CVS Health. Its Aetna business should benefit from increasing membership in its Medicare Advantage and Medicare Part D plans. The company's retail pharmacies and its Caremark pharmacy benefits management (PBM) unit should enjoy increased revenue as prescription drug usage grows. 

CVS Health is also moving into new areas to take advantage of this major opportunity. It acquired primary care providers Signify Health and Oak Street Health. In August 2023, the company launched Cordavis, a new subsidiary that will market biosimilar products. 

Burry no doubt likes CVS Health's dividend too. The dividend currently yields nearly 3.5%. After pausing its dividend hikes in connection with the acquisition of Aetna in 2018, the company has increased its dividend for two consecutive years. 

One potential wild card

There is one potential wild card that could get in CVS Health's way. Congressional scrutiny over how PBMs operate has increased. U.S. Senators Tom Carper (D-Del.) and Chuck Grassley (R-Iowa) introduced legislation in July 2023 that would allow the federal government to more closely regulate PBMs. 

It remains to be seen how much traction the bill will get. However, PBMs don't exactly enjoy a lot of popularity on Capitol Hill these days. This could be problematic for CVS Health because more than half of its total revenue last year came from its PBM business. 

CVS Health's PBM unit continues to perform well, though, winning close to 60% of national employers who changed PBMs for the upcoming year as of early August 2023. David Joyner, president of CVS Health's pharmacy services segment, said in the Q2 call that the company remains "confident in our long-range growth outlook" for the PBM business.

I don't foresee gloom and doom on this front. Burry obviously doesn't either since Scion owns 100,000 shares of CVS Health stock. My hunch is that The Big Short investor will be a big winner with CVS despite the potential bumpy road ahead for PBMs.