Billionaire Bill Ackman’s been investing in one of my favourite S&P 500 growth stocks
Billionaire hedge fund manager Bill Ackman â whos known for his bold bets and contrarian approaches â has become a big name in the investment world in recent years. When he buys a stock today, people tend to take note.
Recently, Ackman, who runs Pershing Square Capital, invested in one of my favourite S&P 500 growth stocks. Should investors consider following him into this one?
A âfantastic franchise at an extremely attractive valuation’
The stock Ackman’s been buying is Amazon (NASDAQ: AMZN), one I have a large position in (itâs currently my second-largest individual stock holding).
He first started buying the stock in April when it experienced a major sell-off as a result of tariff uncertainty. At the time, it was trading significantly below its highs.
We donât have a lot of information on the trade at present (weâll be able to get more details when Q2 13F regulatory filings are posted in mid-July). However, itâs clear Ackman and his team believe they picked up a long-term winner at a great price.
On a call with analysts, Pershing Square’s chief investment officer Ryan Israel said the firm acquired a “fantastic franchise” at an “extremely attractive” valuation. Itâs worth noting that Israel praised the company’s multi-pronged business model, saying the company should be able to navigate any tariff-induced slowdown and continue to deliver strong earnings growth.
Is Amazon worth a look today?
Is this growth stock worth considering today? I believe so. It has experienced quite a significant bounce since its April lows (Ackmanâs purchase was very well timed). But I still think the valuation’s attractive at todayâs share price.
At present, Wall Street expects Amazon to generate earnings per share of $6.17 for 2025. That puts the stock on a forward-looking price-to-earnings (P/E) ratio of about 33.
Thatâs high by UK standards but I donât think itâs unreasonable given Amazonâs phenomenal track record (it’s delivered share price gains of about 25% a year over the last decade) and long-term growth potential. This is a company that’s well positioned to benefit from the growth of a range of industries including online shopping, cloud computing, artificial intelligence (AI), digital advertising, video streaming, digital healthcare, space satellite broadband, and even self-driving cars.
Other attractive features include its fortress balance sheet and huge cash flows. Last year, the company generated operating cash flow of a whopping $116bn (up about 36% year on year).
Iâll point out that while Iâm bullish on Amazon, I donât expect the stock to rise in a straight line from here. Historically, the stock’s been quite volatile and I expect to see continued ups and downs.
Looking ahead, there are plenty of factors that could lead to weaker results and share price volatility including Donald Trumpâs tariffs, a consumer slowdown, less business spend on cloud computing/AI, and competition from Big Tech rivals.
Taking a five-to-10 year view however, I see huge potential here. I reckon this stock can outperform the market by a wide margin over the long term and is worth a closer look.
The post Billionaire Bill Ackman’s been investing in one of my favourite S&P 500 growth stocks appeared first on The Motley Fool UK.
5 stocks for trying to build wealth after 50
The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.
Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
More reading
- 2 beaten-down shares to consider buying for a stock market recovery
- Billionaire Bill Ackman just added this â800-pound gorillaâ to his FTSE 100-listed fund
- How UK investors can use Warren Buffettâs winning strategy to aim for a £1m ISA
- 3 top stocks to consider for a Junior ISA that could help set a child up financially
- AI market to hit $4.8trn by 2033! 2 growth stocks to consider now
Edward Sheldon has positions in Amazon. The Motley Fool UK has recommended Amazon. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Foolâs board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
