Bill Gates, the fourth richest person in the world, is keenly followed by the investor community concerning investments made through his firm Cascade Investment, L.L.C. The three stocks that the firm holds in large quantities are Sanderson Farms (SAFM), FedEx (FDX), and United Parcel Service (UPS). So, we think it could be worth watching these stocks. Let’s discuss.
William Henry Gates III, popularly known as Bill Gates, is one of the world’s most influential figures. Gates is famous for being the co-founder of Microsoft Corporation (MSFT). He is also well known for his philanthropic work through his private charitable foundation, The Bill & Melinda Gates Foundation.
According to the Bloomberg Billionaires Index, Gates is the fourth wealthiest person globally, with a net worth of $127 billion. In March 2020, he left his MSFT and Berkshire Hathaway Inc. (BRK-B) positions to focus on philanthropic activities that include education, climate change, global health and development. Gates has a unique investment style. His investments include real estate, private equity, bonds, and publicly-traded stocks. Michael Larson manages Gates’ investments via the asset management firm Cascade Investment. Cascade Investment has been working on the Foundation’s and Gates’ wealth since 1995. The firm also makes venture capital investments.
Cascade Investments happens to be the largest farmland owner in the United States. On Sept. 8, 2021, Four Seasons Hotels and Resorts announced that Cascade had agreed to acquire a controlling stake in the company. Berkshire Hathaway still dominates the portfolio, representing 43.8% as of the close of the fourth quarter, but the stock is mainly donated to the foundation.
Sanderson Farms, Inc. (SAFM)
SAFM is an integrated poultry processing company that processes, markets, and distributes fresh, frozen, and prepared chicken products in the United States. The Laurel, Miss.-based company sells ice-packed, chill-packed, bulk-packed, and frozen chicken primarily under the Sanderson Farms brand name.
On Oct.21, 2021, SAFM announced that its stockholders had approved an agreement for a joint venture between Cargill and Continental Grain to acquire SAFM for $203 per share. Cargill and Continental Grain will combine SAFM with Wayne Farms to form a new, privately held poultry business upon the transaction’s completion. Chairman and CEO of SAFM Joe Sanderson said, “We believe this transaction will benefit our various stakeholders, including employees, poultry producers, and customers, and we remain focused on continuing to deliver the highest quality poultry products and services.”
SAFM’s net sales increased 45.9% year-over-year to $1.32 billion for the first quarter, ended Jan. 31, 2022. The company’s net income increased 1,934.2% year-over-year to $192.80 million. Also, its EPS came in at $8.64, representing an increase of 1,957.1% year-over-year.
Analysts expect SAFM’s EPS for the quarter ending April 30, 2022, to increase 75.6% year-over-year to $7.62. Its revenue for its fiscal year 2022 is expected to increase 14.5% year-over-year to $5.50 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 18.5% in price to close the last trading session at $189.25.
SAFM’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall A rating, which translates to a Strong Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Growth and Quality and a B grade for Value. It is ranked #3 of 87 stocks in the B-rated Food Makers industry. Click here to see the other ratings of SAFM for Momentum, Stability, and Sentiment.
FedEx Corporation (FDX)
FDX in Memphis, Tenn., provides transportation, e-commerce, and business services through companies competing collectively and operating independently under the FedEx brand. The company’s segments include FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services.
On January 24, 2022, FDX and Microsoft Corp. (MSFT) announced the next solution as part of their multi-year collaboration to transform commerce, supply chains, and logistics. FDX’s President and CEO Raj Subramaniam said, “This next phase of our collaboration will continue to connect the unmatched supply chain insights from the FedEx network with the Microsoft Cloud to improve e-commerce experiences for brands, merchants, and consumers.”
For its fiscal third quarter, ended Feb. 28, 2022, FDX’s revenue increased 9.7% year-over-year to $23.60 billion. The company’s non-GAAP net income increased 29.6% year-over-year to $1.21 billion. Also, its non-GAAP EPS came in at $4.59, representing a 32.2% increase year-over-year.
For the quarter ending May 31, 2022, FDX’s EPS is expected to increase 36.5% year-over-year to $6.84. Its revenue for its fiscal year 2022 is expected to increase 11.5% year-over-year to $93.63 billion. Over the past month, the stock has declined 12% in price to close the last trading session at $199.26.
FDX’s POWR Ratings reflect solid prospects. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. Within the A-rated Air Freight & Shipping Services industry, it is ranked first among 17 stocks. To see the other ratings of FDX for Growth, Momentum, and Stability, click here.
United Parcel Service, Inc. (UPS)
UPS in Atlanta, Ga., is a package delivery company and a provider of global supply chain management solutions. Its segments include U.S. Domestic Package and International Package. Together, these segments are referred to as global small package operations, which provide delivery services for express letters, documents, packages, and palletized freight via air and ground services.
On April 1, 2022, UPS announced that it was trying out a four-wheeled “eQuad” electric cargo bike for deliveries in densely packed urban areas, where bikes have better and easier access. UPS VP of Fleet Maintenance and Engineering Luke Wake said, “There are more and more opportunities for zero-emission solutions like this that can alleviate inner-city congestion. It can also help our operations be more efficient at the same time.”
UPS’ total revenue increased 6.4% year-over-year to $24.37 billion for the first quarter ended March 31, 2022. The company’s adjusted total operating profit increased 12.1% year-over-year to $3.30 billion. Also, its adjusted EPS came in at $3.05, representing an increase of 10.1% year-over-year.
Analysts expect UPS’ EPS and revenue for the quarter ending Sept.30, 2022, to increase 11.8% and 6.4%, respectively, year-over-year to $3.03 and $24.66 billion.t surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has declined 3.9% in price to close the last trading session at $186.40.
UPS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has a B grade for Quality. It is ranked #6 in the Air Freight & Shipping Services industry. Click here to see the other ratings of UPS for Growth, Value, Momentum, Stability, and Sentiment.
SAFM shares were unchanged in premarket trading Thursday. Year-to-date, SAFM has declined -0.72%, versus a -10.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.