Bill Gates Adding to Ecolab Position, but 3 of His Holdings Are Better Buys

William Henry Gates III, widely known as Bill Gates, is one of the world's most influential and wealthiest people, with an estimated net worth of $129 billion as of June 2022. He is the co-founder and former CEO of software giant Microsoft Corporation (MSFT). He focuses mainly on philanthropy through his private charitable foundation, the Bill & Melinda Gates Foundation.

Bill Gates’ investment chief, Michael Larson, overseas family office Cascade Investment Group. And this asset management firm manages Gates’ Foundation and wealth. Based on the recent 13F filing, Bill & Melinda has a vast investment portfolio of more than $19 billion. The Gates Foundation owns several highly profitable companies with sustainable competitive advantages.

Bill Gates recently bought $32 million more of shares of Ecolab Inc. (ECL), the leading provider of water-treatment, hygiene, and infection-prevention goods and services. Bill Gates is ECL’s largest individual shareholder, owning 62 million shares and representing 21.8% of the company. Also, ECL currently represents nearly 3.9% of Bill Gates’ portfolio.

ECL reported a 13% improvement in net sales in the second quarter of 2022, beating Wall Street estimates. However, its top-line growth didn’t translate to bottom-line improvement. Moreover, the quarter’s sales growth was significantly offset by product cost inflation and unfavorable currency translation in a rapidly changing operating environment. The stock has slumped 26.5% year-to-date.

Thus, we think fundamentally sound Bill Gates holdings Walmart Inc. (WMT), Waste Management, Inc. (WM), and Coca-Cola FEMSA, S.A.B. de C.V. (KOF) could be better investments instead. The stocks are rated Strong Buy in our proprietary rating system.

Walmart Inc. (WMT)

WMT is a retail giant that operates supercenters, supermarkets, warehouse clubs, hypermarkets, discount stores, and e-commerce websites, including walmart.com, walmart.com.mx, walmart.ca, and samclub.com. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.

WMT operates nearly 10,500 stores and various e-commerce websites under 46 banners in 24 countries. The company represents about 2.28% of Bill Gates’ investment portfolio.

On July 28, WMT and Getaway, a health and wellness hospitality company, announced a new retail partnership to make simple escapes to nature more effortless and accessible for guests. The new alliance will introduce innovative offerings starting this fall, including The General Store by Walmart, opening at select Getaway Outposts.

The partnership is expected to further the company’s mission to help people Live Better and boost its revenue streams.

In June, WMT and Memomi, an augmented reality (AR) optical tech company, entered an agreement for Walmart to acquire Memomi. The acquisition will reinforce WMT’s commitment to frictionless and omnichannel optical care.

“We’re excited to welcome the Memomi team to Walmart and add their capabilities to our leading virtual reality technology that is transforming the retail experience for our customers and members,” said Cheryl Ainoa, Senior Vice President, New Businesses & Emerging Tech, Walmart Global Tech.

In the fiscal 2023 second quarter ended July 31, 2022, WMT’s revenues increased 8.4% year-over-year to $152.86 billion. Its income before income taxes amounted to $6.64 billion, up 12.2% from the prior-year value. The company’s consolidated net income and net income per common share attributable to WMT came in at $5.15 billion and $1.88, registering increases of 17.9% and 23.7% year-over-year, respectively.

The consensus revenue estimate of $144.07 billion for the fiscal 2024 first quarter (ending April 2023) represents a 2.7% growth from the same period in 2021. The $1.48 consensus EPS estimate for the same quarter represents a 14% rise year-over-year. The company has surpassed the consensus revenue estimates in each of the trailing four quarters.

The stock has gained 2.2% over the past month to close the last trading session at $134.97.

WMT's POWR Ratings reflect a strong outlook. The stock has an overall rating of A, which translates to a Strong Buy in our rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

WMT has a B grade for Quality, Growth, Stability, and Sentiment. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #7 of 38 stocks. To see additional POWR Ratings (Momentum and Value) for WMT, click here.

Waste Management, Inc. (WM)

WM provides waste management environmental services to North America's residential, commercial, municipal, and industrial customers. The company offers collection, recycling, construction remediation, and specialized disposal services for oil and gas exploration and production operations.

WM owns and operates more than 255 solid waste landfills, five secure hazardous waste landfills, 96 MRFs, and 340 transfer stations. The company currently constitutes nearly 14.94% of Gates’ investment portfolio.

WM achieved two milestones during the second quarter that might boost the company’s sustainable growth and profitability.

Jim Fish, WM’s President and CEO, said, “We brought our fifth WM-owned and operated renewable natural gas plant into service in Oklahoma, which is expected to generate about 570,000 MMBtu of RNG and progresses us towards the 21 million MMBtu planned increase in RNG generation by 2026. We also completed technology and automation upgrades at our materials recovery facility in Houston.”

WM's revenue increased 12.3% year-over-year to $5.03 billion in the fiscal 2022 second quarter ended June 30, 2022. The company’s adjusted operating income grew 11.1% year-over-year to $907 million. Its adjusted EBITDA stood at $1.42 billion, up 7.8% year-over-year.

Furthermore, the company’s adjusted net income increased 11.3% from the year-ago value to $599 million, while its adjusted EPS came in at $1.44, registering an increase of 13.4% year-over-year.

The $19.77 billion consensus revenue estimate for the fiscal year 2022, ending December 2022, represents a 10.3% improvement from the last year. Analysts expect WM’s EPS for the current year to increase 18.2% year-over-year to $5.72. The company has topped the consensus revenue estimates in each of the trailing four quarters.

The stock has gained 11.5% over the past month and 22.3% over the past six months to close the last trading session at $173.48.

WM's POWR Ratings reflect a promising outlook. The stock has an overall grade of A, which equates to a Strong Buy in our proprietary rating system.

WM has a grade of A for Quality. It has a B grade for Stability and Sentiment. Within the B-rated Waste Disposal industry, it is ranked #2 of 16 stocks. Click here to access WM's additional POWR Ratings (Momentum, Growth, and Value).

Coca-Cola FEMSA, S.A.B. de C.V. (KOF)

Headquartered in Mexico City, Mexico, KOF is a franchise bottler that produces, markets, and sells Coca-Cola trademark beverages. The company provides a portfolio of products through retail outlets, such as wholesale supermarkets, convenience stores, retailers, restaurants and bars, and home delivery. Additionally, it distributes and sells Heineken beer products in its Brazilian territories.

The company represents about 1.73% of Bill Gates’ portfolio.

On July 14, KOF announced that its subsidiary Spal Indústria Brasileira de Bebidas, S.A., signed a non-exclusive agreement to distribute products of Grupo Perfetti Van Melle, one of the world’s largest manufacturers of confectionery and chewing gum, with global brands such as Mentos and Fruit-tella in its Brazilian territories. This agreement might boost the company’s revenues.

In the fiscal second quarter of 2022, KOF’s total revenues increased 20.1% year-over-year to ₱57.31 billion ($2.87 billion), while its gross profit grew 12% from the year-ago value to ₱25.27 billion ($1.27 billion). Its operating income improved 5.6% year-over-year to ₱7.65 billion ($383.43 million). In addition, net income attributable to equity holders of the company amounted to ₱4.63 billion ($232.06 million), up 39.5% year-over-year.

Analysts expect KOF's revenue for the third quarter (ending September 2022) to come in at $2.61 billion, representing a 9.1% rise from the prior-year period. Also, Street expects the company's EPS for the ongoing year to come in at $0.89, representing a growth of 9.8% year-over-year.

Furthermore, the company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

KOF’s shares have gained 19.3% over the past six months and 15% year-to-date to close the last trading session at $62.72.

KOF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, equating to a Strong Buy in our proprietary rating system.

KOF has a grade of A for Stability. The stock has a B grade for Sentiment, Value, and Quality. Within the A-rated Beverages industry, it is ranked #1 of 35 stocks. To see additional POWR Ratings (Momentum and Growth) for KOF, click here.

WMT shares were trading at $135.78 per share on Thursday afternoon, up $0.81 (+0.60%). Year-to-date, WMT has declined -5.04%, versus a -11.31% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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