Read us and find out Bill Gates’s Top 5 holdings price targets
The top 5 of Bill Gates's portfolio is comprised of : Berkshire Hathaway ; Waste Management ; Caterpillar ; Canadian Natl Railway ; Walmart ; Ecolab.
We have already cover Warren Buffet´s Berkshire Hathaway Top 5 Portfolio. You can check this out here. https://www.elblogdelfinanciero.com/post/find-out-warren-buffett-s-top-5-holdings-price-targets
Waste Management
Waste Management provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.
Our Buy opinion is supported by our view of WM as relatively defensive throughout business cycles as well as its strong FCF targeted for share buybacks, debt repayments, and acquisitions. We anticipate continued strength in the FCF profile, with volume growth returning in 2021 and an attractive, sustainable dividend yield. Potential catalysts include a pick-up in industrial activity as a result of higher infrastructure spending (with likely support from federal infrastructure spending) and increased commercial activity as Covid-19 headwinds lessen. WM is exposed to construction end-markets where we see recovery in 2021. WM commodity pricing will continue to lag peers we believe. Risks to our view and target include rising fuel and other costs, weaker-than-expected growth in the housing market and U.S. economy, a decrease in recycling prices, a lower customer retention rate, and an inability to raise prices to meet return on invested capital goals.
Our 12-month target of $152 values the shares at 31.9x, at the high end of WM's 3-year average and in line with peers' forward average due to our outlook for rising volume and pricing growth as the economy recovers from Covid-19 declines in 2020
Caterpillar
CAT is the world's largest producer of earth-moving equipment as well as a major manufacturer of mining equipment, electric power generators, and petroleum engines.
Our Buy opinion reflects our outlook for benefits from a better balance between production and dealer demand and our outlook for rising commercial construction spending as well as from potential federal infrastructure spending. We think improvement in production levels and inventory in the channel will enable CAT to focus on accurate production levels to meet rising demand as economies recover from Covid-19. We expect moderate recovery in Industrial, supported by growth in most segments and persistent softness within Energy & Transportation. We expect recovery in parts sales in 2021 after aftermarket parts were weak across end markets in 2020. Risks to our view and target include headwinds from a potential second round of global production shutdowns, rising headwinds from foreign currency, renewed volatility in commodity markets, and worsening revenue and operating margin performance.
Our 12-month target of $266 is 25.9x our 2021 EPS forecast, at the upper end of CAT’s five-year range and above peers’ forward average of 20.6x, reflecting our outlook for construction spending growth in 2021, improving inventory levels, and long-term growth catalysts from potential federal infrastructure spending
Canadian National Railway
Canadian National Railway (CN) is the 4th largest railroad in North America, linking customers in Canada, the U.S., and Mexico through 20,000 route miles.
Our Sell opinion is based on a view that Canadian National (CN) will achieve healthy earnings growth with volumes and margins both improving as the pandemic recedes; but that shares are well ahead of fair value indicated by the fundamentals. We expect industrial freight volumes to return to growth in H2 2021 as ramping Covid-19 vaccinations help factory production levels recover. We see this accompanied by strong margin improvement as CN’s train lengthening initiatives will result in valuable cost savings, in our view. However, 2022 sell-side consensus EPS up 16% vs. prepandemic 2019 is too optimistic on the pace of recovery in CN’s important fossil fuel endmarket (22% of revenue), in our view, especially with developed nations pushing their economies off carbon fuels. Given this risk, we think a slightly lower P/E multiple than CN’s 5-year average of 20x is warranted, but current pricing is a premium 21x already optimistic sell-side EPS consensus for 2022. A key risk to our view is CN materially beating our 2021-22 estimates if fossil fuel volumes prove more resilient than we expect against government demands for greener energy.
Our target price is $ 96 equivalent to 19x our 2022 EPS estimate.
Walmart
The largest retailer in the world, Walmart operates a chain of more than 11,000 discount department stores, wholesale clubs, supermarkets, and supercenters.
Our Hold opinion reflects various positives, balanced by concerns surrounding the name, namely that recent same-store growth is unsustainable and that wage pressures and the launch of Walmart+ could produce some shortterm pain in the form of margin contraction. While stimulus will likely provide a boost to consumer spending, we see better opportunities elsewhere across retail. We like WMT's strong history of share repurchases and dividends, and e-commerce growth potential. On September 15, 2020, WMT launched its Walmart+ subscription delivery service priced at $98/year, which we think positions it to take share from grocery retailers, as it includes unlimited, sameday delivery for U.S. consumers on over 160,000 grocery and merchandise items. Risks to our opinion and target price include greater-than-expected economic pressures; unfavorable foreign currency exchange rates; and slower-than-expected sales.
Our 12-month target price of $145 reflects a FY 23 P/E of 23.2x, a premium to historic averages justified by omnichannel growth. We see the target multiple as warranted by expected market share gains following robust ecommerce investment, expanded product offerings, and low prices.
Ecolab
Ecolab Inc. provides water, hygiene, and energy technologies and services for food service and processing, hospitality, health care, industrial, and energy markets
Our opinion for ECL shares is Hold. Given ECL’s strong market position in attractive secular growth markets, the company is expected to see strong sales and earnings growth amid global economic recovery; however, we think shares’ premium valuation mostly captures this. We acknowledge that ECL is in the business of sustainability and improving the health of environments. When the world emerges to the new normal after the current health pandemic, we think ECL’s products and services (focused on hygiene, antimicrobial, and sustainability) will experience strong secular demand growth. Risks to our recommendation and target price include a longer-than-expected decline in demand in key markets (due to the Covid-19 pandemic), more intense competitive pressure, and potentially higher bad debts related to weaker businesses impacted by Covid-19.
Our 12-month target price is $225, or 42.0x our 2021 EPS estimate, a premium to ECL’s 5-year average forward P/E multiple of 27.4x and a large premium to its peers (trading at an average forward P/E of 22.6x), warranted by above-average growth rates, medium-term trends in hygiene standards, and what we view as a more resilient business model (relative to peers).
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