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Bill Gates Picks Top 2 Stock Picks
Unless you're morons like the Hunt brothers, it's hard to lose in the market when you have hundreds of millions to billions of dollars at your disposal. When the super rich take a position in the market, it's very easy to track their moves because of the voluminous size trades. Every smart investor keeps track of their positions as well as the timing of their trades. Typically, the super rich invest with long-term gains in mind. That's a great strategy if you have Alibaba's treasure trove in your basement. Most of us however are looking for shorter term profits with a little dividend income on the back end.
We may not be able to see any option chains the super rich may have incorporated into their position(s) but we can certainly create an option play of our own based on the size and timing of their trade. Analyze the historical data you have at your disposal and carefully plot out your entry and exit strategy on your play. |
Gates' largest investment is in Berkshire Hathaway (NYSE: BRK-B). The Gates Foundation owns more than $8 billion worth of this stock. Bill Gates also sits on the Board of Directors of Berkshire Hathaway and has access to the investment insights of Warren Buffett. It is interesting to note that Gates did not make any new buys in the three months that ended June 30, 2013. He did sell five stocks that made up only a small part of his portfolio.
We can see that Gates is a patient and selective investor. As individual investors, it can be difficult to be as patient as a billionaire. Meeting our financial goals generally requires us to earn a profit on our investments in a reasonable amount of time. To do this, we have to have the discipline to
identify timely buying opportunities.
One way is to start with a list of stocks owned by great investors like Gates. He has access to brilliant analysts, and they have selected each stock based on its long-term potential. Then look for the stocks on that list that are moving higher faster than the rest of the market and are increasing cash flow.
Relative strength (RS) is a way to identify stocks that are moving higher now. It ranks all investments on a scale of 0 (weakest) to 100 (strongest). A number of research studies show stocks that have moved up the most in the past six months (those with high RS) are likely to outperform the market in the next six months. Cash flow growth is often seen among stock market winners. This is a fundamental measure that is usually more reliable than earnings. You should buy when RS is high and cash flow is growing. From the list of stocks in the Gates Foundation, only two are considered buys using these rules right now.
Known for environmentally friendly products, Ecolab (NYSE: ECL) is a consumer goods company that serves a variety of markets. The company offers cleaners and sanitizers for washing dishes and kitchen equipment for the food service industry, and housekeeping supplies for the hospitality industry. It also provides products for the health care, industrial and energy markets.
Revenue topped $12 billion in the past 12 months. Growth in earnings per share (EPS) averaged 12.65% a year over the past five years and is expected to accelerate to more than 15% a year in the next five years. Free cash flow has turned positive in the past 12 months and increased almost 50% in the last year.
Investors have pushed the stock price up nearly 35% since the beginning of the year, and ECL has an RS rank of 100, meaning it has been a top performer in the stock market over the past six months.
We can see that Gates is a patient and selective investor. As individual investors, it can be difficult to be as patient as a billionaire. Meeting our financial goals generally requires us to earn a profit on our investments in a reasonable amount of time. To do this, we have to have the discipline to
identify timely buying opportunities.
One way is to start with a list of stocks owned by great investors like Gates. He has access to brilliant analysts, and they have selected each stock based on its long-term potential. Then look for the stocks on that list that are moving higher faster than the rest of the market and are increasing cash flow.
Relative strength (RS) is a way to identify stocks that are moving higher now. It ranks all investments on a scale of 0 (weakest) to 100 (strongest). A number of research studies show stocks that have moved up the most in the past six months (those with high RS) are likely to outperform the market in the next six months. Cash flow growth is often seen among stock market winners. This is a fundamental measure that is usually more reliable than earnings. You should buy when RS is high and cash flow is growing. From the list of stocks in the Gates Foundation, only two are considered buys using these rules right now.
Known for environmentally friendly products, Ecolab (NYSE: ECL) is a consumer goods company that serves a variety of markets. The company offers cleaners and sanitizers for washing dishes and kitchen equipment for the food service industry, and housekeeping supplies for the hospitality industry. It also provides products for the health care, industrial and energy markets.
Revenue topped $12 billion in the past 12 months. Growth in earnings per share (EPS) averaged 12.65% a year over the past five years and is expected to accelerate to more than 15% a year in the next five years. Free cash flow has turned positive in the past 12 months and increased almost 50% in the last year.
Investors have pushed the stock price up nearly 35% since the beginning of the year, and ECL has an RS rank of 100, meaning it has been a top performer in the stock market over the past six months.
Grupo Televisa (NYSE: TV) provides programming and cable and satellite services to viewers in the U.S., Mexico, the Dominican Republic and other countries. The company reported more than $5.5 billion in revenue over the past 12 months and earnings of more than $680 million, or $1.10 per share. Cash flow per share doubled in the past 12 months.
TV is up only 6% since the beginning of the year, but has an RS rank of 72, just above the buy level of 70 I use for this indicator.
TV is up only 6% since the beginning of the year, but has an RS rank of 72, just above the buy level of 70 I use for this indicator.
Investors should consider joining Gates as long-term shareholders of ECL and TV. Following market gurus like Gates is one of the best ways to make money in the stock market and he is just one of the 20 investing gurus I follow. It's not as simple as looking at their portfolio and buying what they hold... it's about timing the buys just right. Timing matters.
