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Billionaire investor Bill Ackman says these 2 stocks will prosper for the next 30 years

Jamie Cameron
22. 10. 2022
6 min read

Stock prices have plummeted this year and billionaire investor Bill Ackman thinks now is a good time to send more capital into the stock markets. With that statement, he also unveiled his strategy and 2 stocks that will prosper for many years to come.

Bill Ackman

Bill Ackman is an American billionaire investor and hedge fund manager. He is also the founder and CEO of Pershing Square Capital Management, a hedge fund management company.

Ackman said in one of his interviews that he has hardly changed his strategy at all even in this challenging environment. He said he and his fund own the exact same things they owned before.

Bill Ackman:

Look, it's much easier to make money in the stock market in a rising stock market environment, and if you know rates, a falling interest rate environment is generally an environment where asset prices are rising, and so a rising tide lifts all the surrounding boats. We're in a rising interest rate environment right now, so it's obviously more challenging. And I really think what matters is whether central banks around the world stop inflation that's out of control.

24 months ago, central banks around the world were worried about deflation, and that was a very, very dramatic change. And so I think you can do very well as an investor in the stock market if you can find really good quality companies and buy them at attractive prices, and I think today is a pretty good time for investors to be buying.

Even though the markets are an uncertain place right now, Ackman thinks it is and will continue to be a good place to be an investor over the next three, five or 10 years. In general, he says now is the time for investors to devote more of their capital to the stock markets.

While he rates the current environment as attractive from an entry point perspective, he cautions that you still have to choose carefully. He says you have to want to own super high-quality, well-capitalized, dominant businesses that you know will be around in another 30 years. And that's why he believes in these two companies 👇

Hilton Worldwide Holdings $HLT+1.6%

HLT stock is down -16.75% since the beginning of the year.

Hilton Worldwide Holdings is an American multinational hospitality company that manages and franchises a broad portfolio of hotels and resorts, and the company was founded in 1919.

As a major player in the sector and one that relies heavily on the fees it generates from licensing its name and property management, Hilton has proven itself to be a strong company over the long term.

The company's business model: many companies in the hotel space own all or at least most of the hotels in their portfolio. But Hilton is very different. The company has built its business on its name and on managing the assets of other entities. For example, of its roughly 6,700 hotels with over a million rooms, 5,836 are fee-based and another 723 are managed. In reality, however, the company has only 60 properties that it owns. Some of these are wholly owned or leased, while others are related to affiliates of the company. Hilton's physical footprint spans 119 countries worldwide. Yet the bulk of the company's business is tied to the U.S. market.

In terms of portfolio composition, the company has a wide range of high-quality assets. For example, 29% of rooms are classified as upper class. Another 33% are classified as upscale, while 32% are upper mid-scale. Only 3% of rooms are classified as upscale, with the remaining 3% classified as lower-end assets.

  • The company experienced quite a difficult period during the pandemic, but that is in the past and the company is currently recovering solidly.

The company's quarterly results

Restaurant Brands International $QSR+0.5%

QSR stock is down -7.70% since the beginning of the year.

Restaurant Brands International is a Canadian-American multinational holding company focused on the fast food industry. Restaurant Brands owns four of the world's most prominent and well-known fast food restaurant brands - Tim Hortons, Burger King, Popeyes and Fire House Subs.

QSR's franchise business model is high-quality, capital-efficient, and generates high-margin royalties from its four leading brands.

In the long term, QSR represents a significant growth opportunity as all four of its brands have substantial growth ahead of them due to international expansion and a calmed covide situation.

In this regard, Tim Hortons, Popeyes and Fire House Subs are barely penetrated in foreign markets, and although Burger King has a significant presence outside the U.S., its footprint appears insignificant compared to McDonald's, its closest competitor. However, management has indicated that all four brands, and Popeyes in particular, have room to grow in domestic markets.

The company's quarterly results

  • Revenues were $1.64 billion (+14% YoY), above consensus estimates of $1.57 billion, and earnings per share were $0.77 ( -8.4% vs. F2Q2021), which still beat analysts' forecasts of $0.73.
  • In addition, comparable sales increased: by 12.2% at Tim Hortons, by 10% at Burger King and by 1.4% at Popeyes during F2Q2022.
  • Net income for the period was $236 million, reflecting a decrease of 11.6% from the same quarter of the prior year.
  • Cash flow from operations and free cash flow were $669 million and $1.56 billion, respectively, for the three months ended F2Q2022.

QSR continues to trade at a discount to its peers and its intrinsic value, according to analysts. The company has repurchased more than 3% of its outstanding shares over the past twelve months, which, combined with a 4% dividend yield, allows QSR to return approximately 7% of its market capitalization to shareholders each year.

Conclusion

I really didn't expect the selection of these 2 stocks at first, but when you look at it, it makes sense from a certain point of view. Who else is going to prosper, survive overall and even exist for the next x decades? On the one hand we have a company that offers hospitality and has a portfolio of thousands of hotels. Well, on the other hand, we have a company that has 4 world famous fast food restaurant brands (including Burger King) that intend to continue to expand into other countries.

Please note that this is not financial advice. Any investment must go through a thorough analysis.

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