Three stocks that billionaires couldn't miss in 2024
There have been some interesting investment decisions in the financial markets in 2024. Some of the world's best-known investors, including Warren Buffett, Bill Ackman and Michael Burry, have focused on stocks they considered undervalued. Although each of these companies faced challenges, these investors saw opportunities that they thought were too good to pass up.
In the following lines, we'll look at three stocks that caught their attention in the second quarter of this year: Ulta Beauty, Nike, and Shift4 Payments.
Ulta Beauty $ULTA: YTD - 22.19%
Ulta Beauty stock experienced a sharp 22% decline in 2024, presenting an enticing opportunity for investors like Warren Buffett. Buffett's investment company, Berkshire Hathaway, opened a position worth approximately $260 million in the second quarter of this year. While this investment represents only a small part of his overall portfolio, it is an important signal.
Ulta Beauty shares are now trading at less than 15 times earnings, significantly cheaper than the average price-to-earnings ratio for the S&P 500 index. Despite the slowdown in beauty product sales and reduced financial outlook, the company still expects operating profits of over $1.5 billion in 2024 and plans to return $1 billion to shareholders through share buybacks. With stable demand for beauty products, Ulta Beauty shares could deliver positive returns over the long term.
Nike $NKE: YTD -21.12%
Bill Ackman, a well-known value investor, added more than 3 million shares of Nike to his Pershing Square portfolio, valued at approximately $229 million. Despite being the smallest position in his portfolio, the Nike investment was so attractive in his eyes that it could not be ignored.
Nike is currently trading at its lowest price since 2012. The company is facing problems with declining sales and declining profits, which has caused the stock price to drop. However, Ackman seems to be betting that a strong brand like Nike will recover over time and the renewed growth will be an opportunity for future profits.
Shift4 Payments $FOUR: Down 20% from ATH
Michael Burry, known for his successful bet on the U.S. housing market crash during the financial crisis, decided to invest in fintech company Shift4 Payments, increasing the company's stake to 14% of his portfolio.
While Shift4 Payments has not shown as significant a decline as the other two firms mentioned, its stock has barely moved in the past three years, despite the company's significant growth. The firm has focused on acquiring large customers, which has produced strong revenue growth. Shift4 expects revenue growth of at least 44% this year and free cash flow of nearly $400 million, which compared to its market value is about 14 times its projected cash flow.
While Ulta Beauty and Nike may represent value opportunities, Shift4 Payments, due to its growth potential, may offer the largest gains in the coming years.
Disclaimer: There is plenty of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always conduct a thorough analysis of your own.
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