Billionaire Stanley Druckenmiller has a track record that few, if any, investing legends can match. He has never had a year in the red, and he generated average annual returns of 30% over a 30-year period in his career.
Druckenmiller's philosophy is broad, and he invests in many asset classes, buys value and growth stocks, and focuses acutely on macroeconomic trends. Today, the George Soros protégé manages his own funds through the Duquesne Family Office. Here are two of the best Druckenmiller stocks and exchange-traded funds (ETFs) to invest $1,000 in right now.
MercadoLibre: Investing in the "only free market leader in the world"
In 2024, Druckenmiller took a new stake in the booming Latin-American e-commerce company MercadoLibre (MELI -3.29%), a position that made up 3.3% of Duquesne's portfolio at the end of the third quarter. He told CNBC in May of last year that he bought MercadoLibre, along with other Argentine stocks, after hearing the country's leader, Javier Milei, speak at the Davos World Economic Forum. Druckenmiller became a big fan:
I'm an old-style Reagan, free market, pro-immigration, anti-tariff Republican. The only free market leader in the world right now bizarrely is in Argentina of all places, Javier Milei. It's going to be an interesting experiment. This is a highly, highly intelligent leader who was taught in the [Austrian School of Economics].
As with all politics, there is a debate as to how effective Milei's policies have been since taking office. He's managed to cut inflation significantly, although his austerity measures aren't without consequence. MercadoLibre's stock had a lackluster 2024, only gaining about 8%, although it is up close to 200% over the last five years.
The company is still growing at a tremendous rate. In the third quarter, it grew gross merchandise volume by 71% year over year and added close to 61 million unique users to its platform, up 21% year over year and the fastest quarter of growth since 2021.
MercadoLibre is also expanding its fintech arm rapidly. Monthly active fintech users surpassed 56 million in the third quarter, assets under management reached nearly $8 billion, and its credit portfolio surpassed $6 billion.
Trading over 37 times forward earnings, the stock isn't cheap. But owning fast-growing companies in emerging markets can pay off handsomely down the line.
SPDR S&P Regional Banking ETF: Back to the basics of banking
In the third quarter, Druckenmiller purchased a slate of bank stocks as well as the SPDR S&P Regional Banking ETF (KRE -0.21%), which tracks a basket of regional banks and is therefore a good proxy for the banking sector. The ETF is now a top 10 position in his portfolio.
In October, he told Bloomberg that the market seemed very convinced President Donald Trump would win in November. He may have been thinking the same because his purchase of bank stocks right before Trump's victory proved timely.
Banks rallied into the election and have continued to rally. The S&P Regional Banking ETF is up 6.7% (as of Jan. 19) since election night. It wasn't a big election issue, but former President Joe Biden's administration proved tough on banks, taking longer to approve mergers and acquisitions and threatening to impose stricter capital requirements.
The Trump administration should be much friendlier, and it looks like banks will not be facing significantly higher capital requirements in the future.
The environment has greatly improved for banks in other areas. Investment banking activity looks to be on the rebound, and the yield curve has started to steepen after about two years of inversion. Banks tend to perform well when longer-dated Treasury yields are higher than shorter-dated Treasury yields because banks typically borrow money in the short term and lend it out longer term.
There is also likely to be more consolidation among the regional banking sector as banks race to scale up to compete with the large U.S. money center banks. It might finally be time to shine for a sector that got left out of the massive market rally in recent years.
