In this article, we discuss 4 best stocks to buy now according to Bill Ackman. To see more stocks in this selection and read about Bill Ackman’s performance and investment philosophy, click 7 Best Stocks to Buy Now According to Bill Ackman.
4. Restaurant Brands International Inc. (NYSE:QSR)
Pershing Square’s Stake Value: $1,452,512,000
Percentage of Pershing Square’s 13F Portfolio: 13.47%
Number of Hedge Fund Holders: 24
Restaurant Brands International Inc. (NYSE:QSR) was founded in 1954 and is headquartered in Toronto, Canada. It operates as a restaurant franchiser and operator, with brands like Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs under its banner. Bill Ackman’s Pershing Square owns close to 24 million shares of the company, worth $1.45 billion, representing 13.47% of the total 13F securities.
On February 15, Restaurant Brands International Inc. (NYSE:QSR) declared a $0.54 per share quarterly dividend, a 1.9% increase from its earlier dividend of $0.53. The dividend was paid on April 6, to shareholders of record on March 23. Restaurant Brands International Inc. (NYSE:QSR) delivers a dividend yield of 3.65% as of April 11.
The company published its Q4 results on February 15, posting earnings per share of $0.74, topping estimates by $0.05. The $1.55 billion revenue increased 13.84% year-over-year, exceeding estimates by roughly $42 million. Deutsche Bank analyst Brian Mullan maintained a Buy rating on Restaurant Brands International Inc. (NYSE:QSR) but lowered the firm’s price target on the stock to $72 from $75 in light of the Q4 results.
Among the hedge funds tracked by Insider Monkey, 24 funds held long positions in Restaurant Brands International Inc. (NYSE:QSR) at the end of December 2021, compared to 22 funds in the previous quarter. Harris Associates owns one of the largest stakes in Restaurant Brands International Inc. (NYSE:QSR), with 5.6 million shares worth $342.7 million.
Here is what Pershing Square Capital Management has to say about Restaurant Brands International Inc. (NYSE:QSR) in its Q4 2021 investor letter:
“QSR is a high-quality business with significant long-term growth potential trading at a highly discounted valuation.
Comparable sales have recovered or are well on their way to recovery.
Tim Hortons Canada improved to a mid-single-digit decline during Q3 relative to 2019.
Burger King U.S. under new leadership and poised to make a recovery.
Burger King International and the Popeyes brand continue to grow well with strong same-store sales growth relative to 2019 levels. As underlying sales trends recover, QSR’s share price should more accurately reflect our view of its business fundamentals.
Management continuing to make investments for future growth.
Digital: G&A investment to modernize digital platforms and loyalty programs.
New Units: Return to historical mid-single-digit unit growth in 2021 and beyond.
Brand Acquisitions: Purchased Firehouse Subs for $1bn in December.
Remains cheap relative to intrinsic value and peers.
Trades at less than 18x our estimate of 2022 free cash flow per share.
The company began repurchasing shares in August.
As underlying sales trends recover, QSR’s share price should more accurately reflect our view of its business fundamentals. QSR’s share price increased 3% in 2021 and has decreased 7% year-to-date in 2022.”
3. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Pershing Square’s Stake Value: $1,948,818,000
Percentage of Pershing Square’s 13F Portfolio: 18.07%
Number of Hedge Fund Holders: 47
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a California-based company that operates restaurants under the Chipotle Mexican Grill brand. The company has restaurants in the United States, Canada, the United Kingdom, France, Germany, and the rest of Europe. Pershing Square held over 1 million Chipotle Mexican Grill, Inc. (NYSE:CMG) shares in the fourth quarter of 2021, worth $1.94 billion, representing 18.07% of the total securities.
Chipotle Mexican Grill, Inc. (NYSE:CMG) reported earnings for the fourth quarter of 2021 on February 8, posting an EPS of $5.58, exceeding estimates by $0.29. Revenue for the period stood at $1.96 billion, up approximately 22% from the prior-year quarter, topping market consensus by $1.76 million.
On March 30, KeyBanc analyst Eric Gonzalez maintained an Overweight rating on Chipotle Mexican Grill, Inc. (NYSE:CMG), as he believes the company has expanded the implementation of its 5%-6% price increase to an additional 810 stores. The analyst does not expect prominent consumer retaliation and believes that a nationwide price increase in the 5%-6% range suggests upside to current consensus margin/EPS estimates.
According to Insider Monkey’s Q4 data, 47 hedge funds were bullish on Chipotle Mexican Grill, Inc. (NYSE:CMG), compared to 39 funds in the earlier quarter. The total stakes held in Q4 amounted to $3.5 billion. Alkeon Capital Management is one of the leading stakeholders of the company, with shares worth over $502 million.
Here is what Pershing Square Capital Management has to say about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q4 2021 investor letter:
“Chipotle’s superb performance continued in 2021 driven by ongoing strength in digital sales and a recovery of in-store ordering.
Average restaurant sales have now eclipsed the 2015 peak of $2.5mm.
-Same-store sales grew 19% in 2021, or 21% from 2019 levels.
-Strong contribution from innovations including the quesadilla and smoked brisket.
-Superlative value proposition drives pricing power and protects margins.
-Chicken burrito/bowl still priced below $8 in most parts of the country.
-Longer-term opportunity to drive average restaurant sales well beyond $3mm.
Chipotle has a long runway for robust growth.
✓ New unit growth algorithm of 8% to 10% annually.
✓ Chipotlane digital drive-thrus now in 12% of existing and 80% of new stores.
✓ Menu innovations and loyalty program enhancements.
✓ Operating leverage with 40% incremental restaurant margins.
✓ Plans for international expansion given success achieved in Canada. CMG’s share price increased 26% in 2021 and has decreased 16% year-todate in 2022.”
2. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Pershing Square’s Stake Value: $1,964,590,000
Percentage of Pershing Square’s 13F Portfolio: 18.22%
Number of Hedge Fund Holders: 48
Hilton Worldwide Holdings Inc. (NYSE:HLT) is an American multinational hospitality company that operates hotels under the Waldorf Astoria Hotels & Resorts, Canopy by Hilton, Hilton Hotels & Resorts, Hilton Garden Inn, Hampton by Hilton, and Hilton Grand Vacations brands, in addition to others.
Securities filings for Q4 2021 reveal that Bill Ackman’s Pershing Square owns 12.5 million shares of Hilton Worldwide Holdings Inc. (NYSE:HLT), valued at $1.96 billion, representing 18.22% of the total holdings.
In 2021, Hilton Worldwide Holdings Inc. (NYSE:HLT)’s revenue for the year stood at $2.4 billion, reflecting a year-over-year growth of 52.75%. Net income in 2021 came in at $410 million, a strong rebound from the net loss of $715 million in the preceding year.
On February 22, Wells Fargo analyst Dori Kesten raised the price target on Hilton Worldwide Holdings Inc. (NYSE:HLT) to $160 from $147 and kept an Equal Weight rating on the shares after the Q4 results were published. The analyst continues to appreciate Hilton Worldwide Holdings Inc. (NYSE:HLT)’s high margin/fee driven model and believes the lodging demand recovery will benefit the company in 2022. However, the shares are trading at a significant premium, and the analyst thinks greater share price upside can be found elsewhere in the sector in the short-term.
Among the hedge funds tracked by Insider Monkey, 48 funds were bullish on Hilton Worldwide Holdings Inc. (NYSE:HLT) at the end of Q4 2021, compared to 44 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is one of the biggest position holders in the company, with 7.3 million shares worth $1.14 billion.
Here is what Pershing Square Capital Management has to say about Hilton Worldwide Holdings Inc. (NYSE:HLT) in its Q4 2021 investor letter:
“Hilton is a high-quality business with a multi-year runway of accelerated earnings growth and an exceptional management team. Industry conditions poised to exceed pre-COVID levels in the near term.
HLT well positioned for enhanced long-term performance.
-Average daily revenue per room (“RevPAR”) likely to recover to pre-COVID levels before the end of 2022.
-Occupancy is improving with average daily rate (“ADR”) already above pre-COVID levels.
-Ability to change room rates daily provides a hedge against inflation.
HLT well positioned for enhanced long-term performance.
-Market share likely to increase over time.
-Committed to higher long-term structural margins given productivity actions.
-Substantial capital return over time.
COVID-19 validated HLT’s unique high-quality asset-light business model.
-Ability to deftly navigate the “1,000-year-flood” supports higher valuation.
Hilton is poised to deliver long-term earnings meaningfully greater than pre-2020 levels. HLT’s share price including dividends increased 40% in 2021 and has decreased 2% year-to-date in 2022.”
1. Lowe’s Companies, Inc. (NYSE:LOW)
Pershing Square’s Stake Value: $2,645,923,000
Percentage of Pershing Square’s 13F Portfolio: 24.54%
Number of Hedge Fund Holders: 72
Lowe’s Companies, Inc. (NYSE:LOW) is the largest holding in Bill Ackman’s Q4 portfolio, with the billionaire owning 10.2 million shares worth $2.6 billion. The stock accounts for 24.54% of the total 13F investments. Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer based in the United States.
Lowe’s Companies, Inc. (NYSE:LOW)’s full-year 2021 revenue stood at $96.2 billion, up from $89.5 billion in the prior year. Similarly, net income in 2021 increased to $8.4 billion from $5.8 billion in 2020.
On March 22, Lowe’s Companies, Inc. (NYSE:LOW) announced its plans to sell $750 million of 3.35% notes due 2027, $1.5 billion of 3.75% notes due 2032, $1.5 billion of 4.25% notes due 2052, and $1.25 billion of 4.45% notes due 2062. The proceeds will be utilized for corporate expenditure.
Wells Fargo analyst Zachary Fadem on April 7 maintained an Overweight rating on Lowe’s Companies, Inc. (NYSE:LOW) but lowered the firm’s price target on the shares to $260 from $295, based on 18-times his full-year 2023 EPS estimate. According to the analyst, this represents a short-term PE ratio that is in line with the 3/5-year averages, which he believes is attributed to the company’s structural topline, improving margins, and continuous business initiatives.
Lowe’s Companies, Inc. (NYSE:LOW) declared on March 18 a $0.80 per share quarterly dividend, in line with previous. The dividend is payable on May 4, to shareholders of record as of April 20. Lowe’s Companies, Inc. (NYSE:LOW) is a reliable dividend king, with close to 60 years of consecutive dividend increases under its belt.
Eric W. Mandelblatt’s Soroban Capital Partners is one of the top stakeholders of Lowe’s Companies, Inc. (NYSE:LOW), with 3.8 million shares worth $989.6 million. Overall, 72 hedge funds were bullish on the stock at the end of December 2021, up from 60 funds in the last quarter.
Here is what Pershing Square Capital Management has to say about Lowe’s Companies, Inc. (NYSE:LOW) in its Q4 2021 investor letter:
“Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing market
Positioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022
Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.
Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher perspective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
You can also take a look at 10 Oil & Gas Stocks to Invest In According to Rajiv Jain’s GQG Partners and 10 Dividend Stocks to Buy Now According to Billionaire Leon Cooperman.
