“`html
2024: Billionaires Bet Big on Emerging Stars in a Booming Market
The start of a new year offers fresh possibilities for retail and billion-dollar fund managers alike. During the previous year, Wall Street enjoyed a significant bull market. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite saw impressive gains—13%, 23%, and 29%, respectively—culminating in numerous record highs.
Despite this remarkable uptick, top billionaire investors are still searching for what they consider bargains. According to Form 13Fs, which reveal the stock activity of leading asset managers, several billionaires are focusing on five standout companies for 2025—yet surprisingly, the AI powerhouse Nvidia did not make the list.
Start Your Mornings Smarter! Sign up for Breakfast News delivered to your inbox every trading day. Sign Up For Free »
Image source: Getty Images.
Warren Buffett Makes a Move on Domino’s Pizza
The highly regarded investor, Warren Buffett of Berkshire Hathaway, has sold off stocks amounting to $166.2 billion over the past eight quarters (ending Sept. 30, 2024). Yet, he took a keen interest in fast-food chain Domino’s Pizza (NASDAQ: DPZ). Recently released 13F filings show that Buffett’s company bought 1,277,256 shares of Domino’s in the last quarter.
Buffett’s attraction to Domino’s likely stems from the company’s ability to regain customer trust since it revamped its marketing strategy in the late 2000s. By acknowledging past errors and committing to customer satisfaction, Domino’s has transformed its brand image through honesty, loyalty programs, and continuous product innovation.
The company is also progressing with its latest five-year plan called “Hungry for MORE,” which aims to enhance product offerings, improve operational efficiencies through technology, and leverage franchise relationships to elevate the Domino’s brand.
With the company poised for its 31st consecutive year of international same-store sales growth, it’s clear why Buffett would want to invest.
Terry Smith Chooses Apple for Investment
Touted as the “Warren Buffett of the U.K.,” billionaire Terry Smith of Fundsmith was also scouting for investments throughout 2024. He shifted his focus to tech titan Apple (NASDAQ: AAPL), a stock from which Buffett sold over 615 million shares between October 1, 2023, and September 30, 2024.
Smith bought 224,004 shares of Apple, likely noting the company’s impressive capital-return program. Since fiscal 2013, Apple has repurchased more than $725 billion of its own stock, significantly boosting its earnings per share (EPS). This ongoing buyback strategy makes Apple increasingly appealing to value investors.
Moreover, Apple’s Services segment is performing well, with increasing revenue levels despite stagnant physical product sales. A shift towards subscription services aims to improve operating margins and stabilize fluctuations that typically accompany major iPhone upgrades.
However, it’s worth highlighting that Apple has a history of high valuations. Currently trading at 40 times trailing 12-month earnings, it may be challenging to justify this price unless iPhone sales see a marked improvement in fiscal 2025.
Image source: Chipotle Mexican Grill.
Philippe Laffont Invests in Chipotle Mexican Grill
Philippe Laffont of Coatue Management, who oversees nearly $27 billion in assets, usually leans towards tech and healthcare stocks but ventured into new territory during Q3 by investing in Chipotle Mexican Grill (NYSE: CMG). Coatue’s latest filing indicates a purchase of 4,575,054 shares of Chipotle.
The company’s commitment to ethically sourced ingredients has resonated with its customer base. Management recognized early on that consumers were willing to pay more for higher quality food, making rising food costs less of a concern.
Innovation also plays a vital role in Chipotle’s success. The introduction of dedicated mobile-order drive-thru lanes, known as “Chipotlanes,” in 2018 has led to significant growth during and post-pandemic.
Nonetheless, similar to Apple, Chipotle’s success is already reflected in its valuation. With a forward price-to-earnings (P/E) ratio of 44 and same-store sales growth in the mid-to-high single digits, sustaining this growth could be a challenge in the upcoming year.
Chase Coleman Turns to Taiwan Semiconductor Manufacturing
Chase Coleman of Tiger Global Management, who has $23.4 billion in assets under management, typically invests in high-growth tech and healthcare firms. However, during Q3, he directed his attention toward leading chip manufacturer Taiwan Semiconductor Manufacturing (NYSE: TSM), acquiring an additional 564,090 shares and boosting his total stake beyond 3.6 million shares.
While Nvidia has been at the center of the AI narrative for the past two years, attention is shifting towards data centers and practical AI software applications. Taiwan Semiconductor is well-positioned to benefit from the AI boom, bolstered by a healthy backlog of orders.
Further enhancing its appeal, Taiwan Semiconductor is a primary supplier of processing chips for Apple’s popular iPhone, along with producing CPUs for both laptops and desktops.
However, as the company grows, it faces challenges that investors need to consider carefully.
“`
A Closer Look at Nike: A Potential Turnaround Story
Bill Ackman Bets Big on Nike
In an interesting move, billionaire investor Bill Ackman, known for his activist investment style at Pershing Square Capital Management, has made a significant purchase of shares in footwear leader Nike (NYSE: NKE). Ackman bought 13,240,206 shares during the third quarter, demonstrating confidence in the company’s future.
Despite a strong market overall, Nike has faced challenges recently. The company’s former CEO, John Donahoe, who stepped down, focused on enhancing technology and building Nike’s direct-to-consumer platform. Unfortunately, his lack of experience in retail footwear and failure to strengthen wholesale partnerships hindered progress. Anticipations for Nike’s fiscal 2025 reveal a potential 10% decline in sales.
New Leadership: Elliott Hill’s Vision for Nike
The incoming CEO, Elliott Hill, aims to bring Nike back to its foundational strengths by emphasizing the products and marketing approaches that originally engaged customers. However, like many retail turnarounds, this revitalization will not occur overnight and may require time and strategic adjustments.
Notably, there remains a compelling argument for Nike as it seeks to boost sales in crucial markets such as the U.S. and China. The company’s adjusted earnings per share (EPS) for fiscal 2024 stood at $3.95. If Nike can return to this level, it would result in an historically low forward P/E ratio, presenting a tantalizing opportunity for investors.
An Opportunity Not to Be Missed
For those who often feel they’ve missed out on successful stock buys, here’s an interesting chance. Rarely, the analysts issue a “Double Down” stock alert for companies poised for growth. This could be the moment to invest before conditions change.
- Nvidia: Investing $1,000 when we doubled down in 2009 would have grown to $363,385!*
- Apple: A $1,000 investment at the 2008 doubling down would now be worth $45,870!*
- Netflix: If you had put in $1,000 in 2004, it would have swelled to $474,140!*
We’re currently issuing “Double Down” alerts for three promising companies, and this opportunity may not last long.
See 3 “Double Down” stocks »
*Stock Advisor returns as of January 6, 2025
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Chipotle Mexican Grill, Domino’s Pizza, Nike, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
