Billionaire Stanley Druckenmiller is increasingly bullish on these 3 stocks: Here’s why

Stanley Druckenmiller is among the top billionaire hedge fund managers that many investors continue to follow closely. The founder of Duquesne Capital, Druckenmiller’s recent 13-F filing shed some interesting light on where the billionaire investor sees the market here headed.

A former fund manager at George Soros’ Quantum Fund, Druckenmiller has certainly made a name for himself as a top-down investor who balances both long and short positions in his portfolio across a range of asset classes. Besides stocks, he is also heavily involved in bond, currency and futures trading.

In the past quarter, Druckenmiller added 18 new stocks to its portfolio, but its holdings remain concentrated in large positions in three stocks that we found compelling and had the opportunity to dive into as a result of its portfolio valuation.

Here are three of Druckenmiller’s top bets and why I think they could be compelling for investors at current levels.

Key points about this article:

• Stanley Druckenmiller is among the top billionaire hedge fund managers that investors continue to watch for his historically strong long-term returns.
• Here are three stocks that Druckenmiller has a large weight in its portfolio right now and why investors might want to take a look.
• If you’re looking for action with huge potential, be sure to grab our free copy brand new “Next NVIDIA” report.. It has a software stock where we are sure it has 10x potential.

Coherent (COHR)

A large machine using Coherent laser technology and others provides

Coherent (NYSE:COHR) is a leading provider of optical transceivers for hyperscaler data center providers. Obviously, this is a space that has seen incredible growth due to the rise of artificial intelligence technology in recent times. As long as investment continues to pour into the sector, data center spending looks set to continue to skyrocket. And as a major player in the data center and hyperscaler space, Coherent is one of those stocks that I don’t think gets the attention it deserves.

The company’s FY’24 Q4 report highlighted strong performance in its communications segment (accounting for more than 50% of the company’s revenue). This segment saw an incredible 189% year-over-year and 47% quarter-over-quarter revenue growth. That kind of growth is certainly hard to find and is one of the reasons COHR stock is valued at about 3 times sales.

Now, in the grand scheme of things, given how fast Coherent is growing, that multiple doesn’t seem too rich. In fact, I’d say it’s cheap compared to many of the other AI receivers on the market today.

As long as Coherent can maintain its market dominance in its niche businesses, I think this is a stock that could have a lot more upside from here. This is probably Druckenmiller’s most compelling bet, and one I want to delve into over time.

Seagate Technology (STX)

An image of a Seagate drive

Seagate Technologisty (NASDAQ:STX) is one of the leading hard drive manufacturers that has also been a key AI beneficiary of late. The company’s business with disk drives is a key component in data storage. Thus, given our society’s absolutely insatiable demand for data, this is a stock with some of the strongest secular headwinds, making it an easy growth pick for those with a true time horizon of long-term investments.

In addition to posting fiscal stronger than expected results from the fourth quarter and a positive sales forecast, the company also recently introduced Heat Assisted Magnetic Recording (HAMR) technology for improved data storage efficiency. CEO Dave Mosley continues to highlight the company’s product roadmap for next year and Seagate’s focus on efficiency and margins. If the company is able to successfully balance its growth and efficiency initiatives, this is a stock that could certainly be poised for a nice move higher.

Seagate’s strong recent results support its valuation of just 17 times forward earnings. Indeed, like Coherent, this is a stock that I believe is undervalued relative to its long-term growth prospects, and I quite like this pick from Druckenmiller.

Kinder Morgan (KMI)

A Kinder Morgan sign outside the company’s office building

Kinder Morgan (NYSE:KMI) is a much slower growing company on this list, but one that really balances out a nice portfolio. In my view, investors should focus on building a portfolio that can win big during bull markets, but has some downside protection in poor markets. Kinder Morgan is a pipeline operator that offers that kind of stability, especially as geopolitical risks rise and the desire for energy independence in North America remains a top priority.

The Texas-based company is more than just a pipeline operator, also providing storage and transportation services for gas and refined oil. The company generates a majority (about 58%) of its revenue from natural gas pipelines, so those betting on a long-term transition from oil to clean energy largely see this company as a long-term buy.

Analysts seem to agree, with Morgan Stanley raising its price target on Kinder Morgan to $24.00, indicating confidence in its growth in the natural gas market. Analysts expect the new projects to improve earnings visibility, aligning with Kinder Morgan’s pipeline expansion strategy. Recent results showed a 4% increase in adjusted EPS, driven by increased demand for natural gas from LNG facilities and advances in AI.

I think this is a good and safe pick to offset the previous two actions and highlights Druckenmiller’s focus on balance at this point.

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