The Nasdaq Composite is up 60% since bottoming out in late 2022, but the recent buying activity from a select group of billionaires shows there are plenty of stocks that still have room to run.
Daniel Loeb of Third Point, Chase Coleman of Tiger Global Management, and David Tepper of Appaloosa Management have created incredible wealth from successful investing careers. These investors see opportunities in e-commerce, cloud services, and video games.
Let’s look at three stocks each investor recently bought, and why they could deliver great returns for you, too.
1. Amazon
Third Point’s CEO and Chief Investment Officer, Daniel Loeb, has an estimated net worth of $3.3 billion, according to Forbes. Loeb is an opportunistic investor who looks for undervalued stocks that could rise based on specific catalysts. The firm added to its position in Amazon (NASDAQ: AMZN) in the first quarter as the e-commerce leader continues to show progress in reducing costs to grow earnings per share (EPS).
The shares are up 47% over the last year and currently trade at almost 40 times this year’s consensus earnings estimate. This valuation looks expensive, but Amazon’s earnings are growing so rapidly right now that the stock could actually look quite cheap in another few years.
Amazon has been optimizing its inventory across regional fulfillment centers to speed up delivery. It’s on a mission to rein in costs to maximize the company’s profit potential, and that’s working like a charm. The company’s earnings tripled year over year in the first quarter, and it could continue to report substantial earnings growth as management is still identifying areas to improve efficiency.
Loeb clearly likes Amazon’s dominant position in online retail shopping and its ability to execute on maximizing financial results. Wall Street analysts project Amazon’s earnings per share will reach $7.39 in 2026, and the company’s latest results indicate it is well on track to meet those estimates.
Amazon has always commanded a premium valuation due to recurring revenue streams from its loyal Prime members and the long runway of growth it has in its cloud computing business. If the stock is still trading at a forward P/E of 39 in two years, that would put the share price at $288, implying an upside of 63%.
2. Take-Two Interactive
Chase Coleman is the founder of Tiger Global and has an estimated net worth of $5.7 billion, according to Forbes. Tiger Global oversees about $50 billion in equity assets and has delivered superior returns for investors over the last two decades. One stock the firm bought in the first quarter is leading video game producer Take-Two Interactive (NASDAQ: TTWO).
The video game industry has a long history of growth going back to the 1970s. This is reflected in Take-Two’s share price performance, which handed investors a market-beating 674% cumulative return over the last 10 years. Take-Two stock is on the march as investors look forward to a blockbuster new release next year.
Take-Two’s Grand Theft Auto V has been a runaway success, selling around 200 million copies. The game offers players continued updates and expansions that keep them playing year-round, which is why investors are high on the company’s prospects as the next release in the long-running series is around the corner.
Grand Theft Auto (GTA) VI is planned for launch in the fall of calendar 2025, and there appears to be enormous pent-up demand for the first GTA title in over a decade. The official trailer was released in December and has been watched 192 million times to date on Alphabet‘s YouTube.
What’s more, Take-Two has several other releases scheduled for the next few years, which are expected to drive EPS up to $9.06 over the next three years, according to the Wall Street consensus.
Even if Take-Two’s forward P/E drops from an expensive 64 to a more reasonable multiple of 30, Wall Street’s forward EPS estimate would imply a share price of $271, implying a nearly 70% upside over the current share price.
3. JD.com
JD.com (NASDAQ: JD) is one of the leading online retail businesses in China, and it has over $150 billion in annual revenue. The company has maintained stable revenue over the last year in a weak economy, but slowing growth sent the stock well off its previous peak.
Billionaire hedge fund manager David Tepper, who has a net worth of over $20 billion, is one of the most successful investors over the last few decades. He took advantage of the lower share price to acquire a stake in JD.com worth almost $100 million in the first quarter. Tepper is clearly making a contrarian bet on one of the leaders in China’s internet sector, which has seen many of the top stocks fall to new 52-week lows over the last year over increasing competition and sluggish consumer spending.
JD.com stock has already climbed about 45% off the 52-week low. The share price is responding to positive financial results, where the company’s revenue grew 7% year over year in the first quarter, driven by strong growth in active customers.
The latest results could be the start of a trend. JD.com’s operational efficiency is a solid competitive advantage. The company provides logistics support to other major retailers like Walmart, and it continues to expand same-day delivery to more customers to solidify its competitive position.
The stock’s forward price-to-earnings ratio of 9.1 is a steal. As the company recovers, Wall Street analysts project the company’s earnings to reach $4.08 in 2026. A combination of healthy earnings growth and a higher P/E could lead to substantial gains from the current share price. The S&P 500 average P/E is 27, so JD.com could double in value if the stock’s valuation moves closer to the market average.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has positions in JD.com. The Motley Fool has positions in and recommends Alphabet, Amazon, JD.com, Take-Two Interactive Software, and Walmart. The Motley Fool has a disclosure policy.
3 Stocks Billionaires Are Buying in the Wake of the Nasdaq Bull Market was originally published by The Motley Fool
