Billionaire David Abrams’ 10 Stock Picks with Huge Upside Potential

7. Willis Towers Watson (NASDAQ:WTW)

Abrams Capital Management’s Stake: $225.78 million

Number of Hedge Fund Holders: 48

Average Upside Potential as of May 8: 20.91%

Willis Towers Watson (NASDAQ:WTW) is an advisory, broking, and solutions company. It offers a range of services, such as strategy & design consulting and plan management service & support. Some of its group benefit programs include medical, dental, disability, life, voluntary benefits, and other coverages. It also provides advice, data, software, and products to address different client concerns.

The company’s Risk and Broking (R&B) segment showed a 7% organic growth in Q1 2025, which also marked its 9th consecutive quarter of high single-digit to double-digit growth. This was fueled by R&B’s specialization strategy and ongoing investments in talent, tech, and innovation. Within R&B, the Corporate Risk and Broking business also grew by 8%.

Willis anticipates mid to high single-digit growth for the full year 2025 for R&B alone. On March 18, UBS analyst Brian Meredith upgraded the stock’s rating from Neutral to Buy, while also increasing the price target from $344 to $395 per share. The analyst expects Willis Towers Watson (NASDAQ:WTW)  to sustain an organic revenue growth of 5.9% in 2025, compared to a consensus estimate of 5.2%.

Heartland Mid Cap Value Fund has expectations for further margin and cash flow improvement at the company and stated the following regarding Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its Q4 2024 investor letter:

“Another example of a successful self-help story is Willis Towers Watson Public Limited Company (NASDAQ:WTW). This insurance brokerage and consulting firm operates two segments: Health, Wealth, and Career (HWC) accounts for 58% of revenues and includes services such as retirement plan administration, health care plan outsourcing, and executive compensation consulting. The other segment, Risk & Broking (R&B), includes global insurance brokerage and risk management consulting services.

In 2020, competitor Aon Plc attempted to acquire WTW in an all-stock merger that would have created the world’s largest insurance brokerage. However, the Justice Department sued to block the merger, which was called off in July 2021. The turmoil from the split caused WTW to significantly underperform its peers on critical metrics including organic revenue, earnings growth, margins, and free cash flow conversion.

In 2022, CEO Carl Hess was brought in to turn the business around. He implemented a restructuring plan to transition the business from a roll-up with disparate systems into a streamlined operating company. Since then, organic growth has accelerated to peer-like performance. We expect WTW’s operating margin and free cash flow, which still trails that of its peers, to narrow driven by the sale of its underperforming Medicare brokers business along with continued operational streamlining efforts.

WTW currently trades at 17.1X consensus 2025 earnings and 13.1X EV/EBITDA, well below its peers, who are trading at a median PE of greater than 23X and 15.4X EV/EBITDA.”