All the major stock market indexes are trading close to new highs, pushing valuations well above historical norms. The current price-to-earnings (P/E) ratio for the S&P 500 is around 30—almost double the historical average.

It is getting challenging to find reasonably priced growth stocks in 2025. But, billionaires often use a mix of strategies and criteria when selecting stocks. Here are some common factors they consider:

• Company Fundamentals: They analyze financial metrics like revenue growth, profit margins, return on equity (ROE), and earnings per share (EPS) to assess a company’s financial health.
• Competitive Advantage: They look for companies with a unique product or service that gives them an edge in the market.
• Valuation: Stocks undervalued relative to their intrinsic worth are often attractive, as they offer potential for long-term gains.
• Debt Levels: A company’s debt-to-equity ratio is scrutinized to ensure it isn’t over-leveraged, which could hinder growth.
• Market Trends: They consider broader economic and industry trends to identify sectors with growth potential.
• Management Quality: Strong leadership and a capable management team are key indicators of a company’s ability to execute its strategy.
• Long-Term Potential: Many billionaires focus on companies with sustainable growth prospects and the ability to weather market fluctuations.

These criteria often combine with a deep understanding of the market and a disciplined approach to investing.