Domino’s and Nike are two names that have failed to please their shareholders this year but hedge funds continue to bet big on both stocks for 2025.
A number of big investors have recently increased their stakes in Domino’s and Nike – indicating they expect a turnaround in both next year.
Let’s take a closer look at what each of these two stocks have in store for investors.
Domino’s Pizza Inc (NYSE: DPZ)
Legendary investor Warren Buffett’s conglomerate Berkshire Hathaway has recently loaded up on shares of Domino’s Pizza Inc.
Berkshire invested $500 million in Domino’s stock in the third quarter of 2024 as it found it in line with its value investment philosophy. DPZ, in fact, was the firm’s biggest buy in Q3.
Other notable names that are currently invested in Domino’s Pizza include Philippe Laffont’s investment management company – Coatue Management.
Domino’s has acknowledged intense competition for cost-conscious customer within the fast-food space – but Berkshire and Coatue’s long bets on it suggest they’re convinced DPZ will be able to grow its market share moving forward.
In October, the company’s chief executive Russell Weiner also told investors that “our Hungry for MORE strategy is resonating, despite a pressured global marketplace.”
The likes of Berkshire Hathaway and Coatue Management remain bullish on Domino’s shares also because the pizza chain reported better-than-expected profit for its third financial quarter in October.
Domino’s earned $4.19 per share in Q3 versus $3.64 a share that analysts had called for. Note that DPZ currently pays a dividend yield of 1.44% as well.
Nike Inc (NYSE: NKE)
Nike has struggled with a decline in profit and revenue this year – but the weakness has failed to scare Bill Ackman’s hedge fund management company Pershing Square.
Pershing Square made a huge bet that raised its stake in NKE last quarter to about $1.4 billion. As of the end of June, the hedge fund owned only $220 million worth of the athletic apparel and footwear company.
Pershing’s long bet on Nike Inc suggests Bill Ackman is convinced the revised strategy that the company’s new CEO Elliott Hill outlined earlier this month will bear fruits in 2025.
Hill is committed to reinvigorating Nike’s focus on innovation and sports. “In a moment where our team, brand, and business are being challenged, my singular focus is to help get us back on track, to get back to winning,” he told investors on a recent earnings call.
Despite a slowdown, Nike topped Street estimates for both revenue and profit in its second financial quarter. Despite challenges, the management continues to pay a healthy dividend yield to reward its investors for loyalty.
Wall Street, however, takes Nike’s potential turnaround to take time.
The post Domino’s and Nike: why investors are betting on a 2025 comeback appeared first on Invezz
