2 Billionaire No-Brainer Stocks to Buy Right Now

Because no one knows what will happen in the stock market at any given moment, investors are always looking for advice, guidance and direction. What better place to find it than the portfolios of billionaire asset managers? It’s a strategy that makes sense as long as, of course, you do your own due diligence. After all, your strategy and allocation will likely look different from Warren Buffett’s.

Two stocks that are popular right now among some asset managers and could provide inspiration for your next great buy are Amazon (AMZN -0.73%) and PayPal Holdings (PYPL 0.63%). Here’s why.

1. Amazon: A no-brainer growth buy

Buffett owns Amazon, as do many other billionaire asset managers, such as Larry Fink of BlackRock and Ken Fisher of Fisher Asset Management. It fits so many different investment styles, which is why it’s such a universal investment. It gives growth but is not very risky. It has a lot of opportunity, but it is backed by its incredible brand and assets.

E-commerce is still a standout. Amazon accounts for more than a third of all U.S. e-commerce, and its business grew 9 percent in the U.S. in the second quarter, with 10 percent growth internationally. CEO Andy Jassy noted that while there is strong loyalty from Prime members, shoppers continue to trade up to cheaper products due to inflation, which affects overall sales growth. When they rise, these numbers, impressive as they are, could accelerate.

Now the big excitement is about generative artificial intelligence (AI), and Amazon has an advantage as a leader in cloud computing services, with more than 30% of the market. Customers of its Amazon Web Services (AWS) are looking for flexibility, and Amazon offers a wide range of services aimed at companies that have in-house developers as well as smaller customers that need easy-to-use solutions.

Amazon points out that only a small percentage of information technology (IT) spending is currently in the cloud, but there will be a big upheaval, and it’s starting to happen. Amazon is poised to benefit, saying its generative AI business already has a “multi-billion dollar revenue run rate.”

There’s also advertising, streaming and more, and on top of all that, Amazon stock is trading at its lowest valuation in years at its current price. That makes it a growth buy that will also work for value investors.

2. PayPal: A worthless purchase

PayPal Holdings has been a big disappointment for investors in recent years. It has squandered its lead in digital payments, allowing new service providers to steal market share, and its stock has fallen 74% over the past three years.

But it recently got a new CEO and there has been a lot of progress. PayPal comes with an incredible brand, important relationships with millions of merchants and customers, and massive opportunities. That’s why it looks more like a bargain than a value trap and attracts billionaires.

Revenue rose 9% in the second quarter on a currency-neutral basis, beating guidance of 7%. Meanwhile, operating margin expanded 1.3 percentage points to 16.8%. Profitability and cash flow have been an issue for PayPal recently, and it demonstrated strength on both accounts in the second quarter, with earnings per share (EPS) up 17% year over year and adjusted free cash flow of $1.1 billion. dollars.

New CEO Alex Chriss did what needed to be done; sharpening the company’s focus and focusing on innovation. Some of the billionaire hedge fund managers who have PayPal stock in their portfolio include Ken Griffin of Citadel Advisors, John Overdeck and David Siegel of Two Sigma Investments, and Israel Englander of Millenium Management.

At the current price, PayPal stock is trading at 17 times trailing 12-month earnings, which looks like a bargain given its brand and opportunities. If you already took a chance on PayPal when it was even smaller, like some of the billionaires who own it, you would have already seen the investment appreciate — it’s up 21% since its second-quarter earnings release. But it’s not too late to buy; PayPal seems like a worthless buy right now.