Bill Ackman is a legendary money manager whom do-it-yourself investors should pay close attention to. Indeed, Bill Ackman made headlines recently for his expectations of a rate cut coming at some point in the first quarter of next year.
In recent quarters, Ackman scooped up shares of search giant Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), among other moves. As a value-conscious investor and Warren Buffett disciple, such bets are hard to ignore if you’re also a fan of the Oracle of Omaha.
In this piece, we’ll dig into three of the most intriguing Bill Ackman stocks.
Alphabet (GOOG, GOOGL)
Google’s parent, Alphabet, has not been the hottest Magnificent Seven stock this year. Still, its year-to-date performance is not bad at all, with Class A shares up over 53%, and Class C up over 54%, thanks in part to its promising role in the AI race. Some may view Google’s search dominance as being at risk from the rise of large language models (LLMs). However, the bulls would probably argue that its AI projects can grow into profitable businesses that can compensate for any disturbance of Google Search’s moat.
Bill Ackman’s investment in Alphabet makes sense. It’s a bet on AI at a price that can only be described as affordable. Personally, I think Alphabet is being underpriced due to uncertainties facing the future of Search. Will we all still be “Googling” as AI chatbots become faster and more powerful? Most likely, but to a lesser extent, as we move some queries to an LLM.
On Wednesday, Google launched its much-awaited AI model named Gemini, an AI model that the company hopes can trounce ChatGPT. Shares of Alphabet popped more than 5% on the following day as investors warmed up to the AI model’s potential. Indeed, ChatGPT isn’t the only game in town anymore!
Bill Ackman has likely spotted a gem in Alphabet stock. Today, shares trade at a mere 24.8 times trailing price-to-earnings — not a high price for an innovator full of AI growth potential. New chatbots could pull down the barriers to entry to Search, but I’d be more than willing to play the defensive in AI with Alphabet stock at these valuations.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) is a quick-serve restaurant play that’s been a holding in the Pershing Square portfolio for a few years now. Bill Ackman’s big Mexican food bet has paid off in a big way.
Whether we’re talking about new additions to the menu (the introduction of queso) or the rise of food-prepping robots assisting humans in the kitchen, it’s clear Chipotle has what it takes to keep its earnings growth trajectory going strong for years to come.
Bill Ackman reportedly took a bit of profit off the table earlier this year. In any case, I still find the quick-serve restaurant play to be one of the best names among Bill Ackman stocks, even as shares hover slightly below all-time highs, just south of $2,300 per share.
At 52.52 times trailing price-to-earnings, CMG stock is definitely not cheap. But if the company can keep hitting its targets, I expect Chipotle will remain on the list of Bill Ackman stocks.
Hilton Worldwide (HLT)
Hotel chain Hilton (NYSE:HLT) is another one of Pershing Square’s longer-term bets. Though Ackman reportedly lightened up on shares in a quarter earlier this year, the stock still stands out as one of the most intriguing plays of the batch if you believe that travel’s recovery will continue strong into 2024.
Sure, there are macro headwinds, but as rates cool and consumers return to a better spot, top-tier hotel companies like Hilton could continue to fare well. Like Chipotle, Hilton stock is close to a new all-time high at around $168 per share.
Trading at 33.9 times trailing price-to-earnings, shares are also not cheap. However, with one of the best brands in the industry and strong profitability from the firm’s latest quarter, Hilton stock certainly stands out as a pricy option in Bill Ackman stocks that could become a lot pricier in the new year.
On the date of publication, Joey Frenette held shares of Alphabet (Class C). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
