Here, I’m going to highlight three shares that big-name money managers were buying in the third quarter of 2023. I’ll also provide my take on each.

Amazon

First up, we have Amazon (NASDAQ: AMZN).

This stock was bought heavily by several big names in the investment world during Q3, including billionaire hedge fund manager David Tepper, who runs Appaloosa Management, and Brad Gerstner of Altimeter Capital.

It’s worth noting that Gerstner – who’s generally considered to be one of the world’s best tech investors – more than tripled his holding in the e-commerce/cloud computing powerhouse.

I like the look of Amazon at current levels. It’s quite expensive (which adds risk). Currently, its forward-looking price-to-earnings (P/E) ratio is about 40.

Yet with the company having cut costs in recent years, its profits are now rising rapidly. Next year, for example, net profit is forecast to rise about 36%.

Meanwhile, its top line is still growing at a healthy clip, thanks to solid growth in both its e-commerce and cloud businesses.

Given the top- and bottom-line growth, I think the stock can continue to rise from here.

Marriott International

Up next is hotel group Marriott International (NASDAQ: MAR), which owns some of the world’s most popular hotel brands including Marriott, Sheraton, and W Hotels.

This stock was bought by UK fund manager Terry Smith, who runs the popular Fundsmith Equity. 13F filings show that in Q3, he snapped up around 4.2m shares, which probably cost him somewhere around $800m.

I can see why Smith likes this stock. Right now, the travel industry is booming and hotel companies are doing really well.

Marriott, for example, just posted net income of $752m for Q3, up 19% year on year.

And the longer-term prospects look good too. In the long run, the travel industry looks set to benefit from a number of powerful trends including rising global wealth and the retirement of Baby Boomers.

Of course, a downturn in consumer spending presents a risk in the near term.

I like the long-term growth story though.

I’ll point out that I’ve recently been buying shares in rival InterContinental Hotels, which is listed on the London Stock Exchange.

Alphabet

Finally, we have Alphabet (NASDAQ: GOOG), the owner of Google and YouTube.

This was snapped up by billionaire hedge fund manager Bill Ackman, who runs Pershing Square Capital Management (and has an investment trust in the FTSE 100) and several other top hedge fund managers, including David Tepper and Stanley Druckenmiller.

Alphabet is another tech stock I’m bullish on (it’s my second-largest holding).

This is a company that operates in a range of fast-growing industries including digital advertising, cloud computing, streaming, self-driving cars, and more.

So, it looks poised to generate solid growth in the years ahead.

Meanwhile, its valuation seems very reasonable.

Currently, the forward-looking P/E ratio is only a little above 20.

Of course, the big risk here is Microsoft’s move into search.

I think Alphabet has what it takes to remain a leader in this space, however.

The post The world’s best stock market investors have been buying these 3 shares appeared first on The Twelfth Magpie.

So we asked two Fools to name their favourite shares in the sector right now, and why. As ever, note that returns are not guaranteed and past performance is not a reliable indicator of future results.

easyJet has more room to climb

By John Choong: One of the FTSE’s biggest winners so far this year has been easyJet (LSE:EZJ). The shares have risen by an impressive 50% and are up 75% from their October lows. And while the consensus is to buy low and sell high, easyJet shares are still nowhere near their pre-pandemic highs. In fact, they’re still down by 60% — which is why I still see its current share price as a buying opportunity.

The hot momentum that fuelled the steep climb for travel stocks earlier this year may have dissipated. However, investors shouldn’t take this as a sign of waning demand. In easyJet’s latest trading update, CEO Johan Lundgren cited strong bookings momentum going into the summer, and expects the budget airline’s capacity to continue growing throughout 2023, with a return to pre-Covid levels by September.

More excitingly, the company’s up and coming Holidays segment (where customers can book packages), is proving to be a huge driver for revenue growth and should help expand the firm’s margins. And with fuel costs also expected to decline this year, this should help easyJet’s earnings, which are forecast to come in at 27.9p per share, an increase of almost 250%. That said, there’s always the risk that fuel prices climb back up or a deeper-than-anticipated recession hits, which could dampen forward bookings, and push the stock back down.

And despite its shares having risen drastically this year, the stock’s valuation multiples remain cheap and comfortably below the industry’s average.

What’s more, the group has robust financials, which is a tough find for travel stocks, especially after the pandemic. Its balance sheet boasts strong liquidity (£3.64bn) that sufficiently covers debt (£3.20bn) and has positive free cash flow (£246m). Thus, I see easyJet shares as the best FTSE travel stock out there.

John Choong owns shares in easyJet.

Cheap, stable and global: Marriott bounces back

By Mark Tovey. When it comes to travel stocks, I think buying Marriott International (NASDAQ: MAR) is like booking the presidential suite.

The hotel industry provides more consistent revenue streams than the airline industry. Fuel price spikes, cut-throat competition and even volcanic eruptions can leave airline operators’ profits up in the air. 

By contrast, Marriott’s globally diversified business has unflappable foundations. The hotelier operates nearly 8,300 properties under 30 brands spanning 138 countries and territories.

With a price-to-earnings (P/E) ratio of 20, I think Marriott looks cheap considering it is exposed to high-growth markets in the developing world. In 2022, the company added more than 65,000 rooms globally, and its worldwide development pipeline totalled over 3,000 properties and more than 496,000 rooms.

Moreover, Marriott has bounced back from pandemic-era shutdowns. Fourth quarter revenue per available room increased 4.6% worldwide in 2022 compared with the 2019 fourth quarter – and that’s after adjusting for inflation.

My main concern about investing in Marriott is that interest-rate rises around the world are weighing on real estate prices. That’s because, like any asset, hotels are valued in terms of the rents they generate over time. With higher interest rates, the opportunity cost of buying a hotel – and not for example a government bond – increases. Therefore, the hotel’s price must fall to restore equilibrium.

However, taking a longer-term view, higher interest rates also make obtaining loans for capital-intensive projects less possible. That would in turn suggest fewer hotels being built, and less competition for Marriott.

I plan to buy shares in Marriott when I next have some spare cash.

Mark Tovey does not have a position in Marriott International.

The post Better travel stock buy: easyJet vs Marriott International appeared first on The Twelfth Magpie.