2 Billionaire Stocks to Buy Before 2025

If you want to invest like a billionaire, you have to be willing to buy stocks when a company experiences temporary problems. Only when the short-term outlook is bleak can you invest in a great business below its value.

Bill Ackman of Pershing Square and Berkshire Hathaway CEO Warren Buffett has implemented a value-based strategy to amass multi-billion dollar fortunes. As Wall Street chases hot tech stocks, Ackman and Buffett find great value in these top retail brands. Let’s see why.

1. Nike

Pershing Square disclosed a $10 billion U.S. equity portfolio in the second quarter. Added two new stocks to the portfolio, incl NIKE (NKE 6.84%). Ackman’s investment strategy involves buying stakes in large, profitable companies when they’re on sale, and Nike certainly fits the bill. It dominates the sportswear market with $51 billion in final revenue — and footwear generates two-thirds of that amount.

Nike didn’t get to where it is today without many ups and downs over the past 50 years. For a clothing business, revenues may decline during economic downturns or periods of weak consumer demand. High inflation and interest rates have hurt the consumer in recent years, and Nike has felt the sting. The company’s revenue fell 2 percent year over year in the fiscal fourth quarter ending in May.

Management calls fiscal 2025 a transition year as it repositions itself for long-term growth.

Ackman’s acquisition is timely. Nike shares are trading at their lowest price-to-earnings (P/E) multiple since 2017. Before the recent revenue decline, Wall Street analysts expected Nike to grow earnings at double-digit rates over the long term. Nike can still hit that pace.

Importantly, most of Nike’s problems stem from its lifestyle products. Revenue from performance products such as running and basketball shoes grew at healthy rates in the quarter. Demand for fitness products has contributed positively to the apparel business, and management likes the specific opportunity it sees in women’s apparel.

The global sportswear market is expected to reach $293 billion by 2030. This is an incremental growth of $70 billion from 2023, which is larger than Nike’s annual revenue. As a leading brand with a large marketing budget, Nike will undoubtedly grow again, so buying shares at these lower share prices could pay off handsomely in five years.

2. The last beauty

Warren Buffett’s company has unveiled a new stake in the major cosmetics retailer The ultimate beauty (ULTA -0.32%) the last quarter. It’s another example of a big investor pouncing on the opportunity to buy an industry-leading business at a fire sale price.

The beauty industry has been booming following the pandemic and is expected to grow over the next few years. As an industry leader, Ulta has a competitive advantage based on a wide selection of products in salon styling, skin care, fragrances and cosmetics. It operates more than 1,400 stores that are strategically positioned in high-traffic areas.

The company has seen annual revenue growth of 15% over the past 10 years, with earnings coming in at a robust 23% per year, showing opportunities for this leading retailer to expand and gain market share. However, comparable-store sales fell 1% year-over-year in the latest quarter, sending the stock down 31% from its previous peak.

Strong growth in the beauty market in recent years has brought more competition. Management noted that there are more places to buy beauty products, with more than 1,000 new distribution points opened in recent years. This has put pressure on Ulta Beauty’s market share.

Still, Buffett or one of his deputy investors is clearly focused on the Ulta Beauty brand and the ability to use that advantage to regain market share. It starts with the Ulta loyalty program, which grew 5% year-over-year to 43.9 million members. Delivering more value through its loyalty program is a big opportunity for Ulta Beauty to navigate the near-term phases of consumer spending and come out on top over the next few years.

The stock is currently trading at a forward price-to-earnings ratio of 16, based on next year’s earnings estimate. Ulta has tremendous long-term potential. It generates just $11 billion in annual revenue in an industry that is expected to reach $129 billion by 2028, according to Statista. The stock can provide excellent returns from here.