6. Canadian Pacific Kansas City Limited (NYSE:CP)
Chilton Investment Company’s Stake Value: $157,082,967
Number of Hedge Fund Holders: 48
Canadian Pacific Kansas City Limited (NYSE:CP) is one of the safe stocks to buy according to billionaire Chilton. Canadian Pacific Kansas City Limited (NYSE:CP) is a major North American transportation company specializing in rail freight, offering services that link Canada, the United States, and Mexico. Canadian Pacific Kansas City Limited (NYSE:CP) is set for strong growth due to its robust domestic intermodal business and a strong Canadian grain harvest. The merger with Kansas City Southern (KCS) is also generating significant revenue synergies, enhancing train speeds and reducing terminal delays. These factors position Canadian Pacific Kansas City Limited (NYSE:CP) well to take advantage of cross-border trade, benefit from trends like nearshoring, and increase its market share.
On its recent earnings call, CFO Nadeem Velani stated that Canadian Pacific Kansas City Limited (NYSE:CP) expects to improve its operating ratio in Q4 2024 compared to the previous year, despite challenging comparisons. After posting a 58.7% operating ratio in Q4 2023, a better ratio in Q4 2024 would show significant margin improvement from Q3 2024.
“I think we’ve been accruing on what we anticipate a fair ruling and a fair kind of win-win situation between us and labor. And so I’m not concerned about that. I mean in the near term, we’re going to have a bit of headwind. We had a significant casualty costs that that we faced in July we’re going to feel in the third quarter. That being said, there’s still two months left in the quarter, and we got to keep them on rail, and we can help mitigate some of those costs. And I think we’ve seen some additional stock-based comp costs that we’re going to feel in Q3 year-over-year. Outside of that, the way the network is running and the operating leverage that I see in front of us, I think it more than offset some of those costs, and I think we’re going to have a very strong back half of the year.
So perhaps not sequential improvement in the OR in Q3, because of some of those headwinds I just mentioned. But I think in Q4, we’re set up to have a record operating ratio for CPKC, and I think it’s going to be a very strong finish to the year, and it’s going to set us up for a 2025 that I think could be a very powerful earnings model.”
GS analytics analysts are optimistic about Canadian Pacific Kansas City Limited (NYSE:CP)’s medium to long-term margin prospects with an attractive FY25 forward P/E valuation and are considering the company a strong buy. They expect Canadian Pacific Kansas City Limited (NYSE:CP) should benefit from volume leverage, synergy gains, and improved pricing in the long run.
Canadian Pacific Kansas City Limited (NYSE:CP) is ranked 6th on safe stocks to buy according to billionaire Chilton. As of the end of Q1 2024, Chilton Investment Company held 1,781,592 shares of Canadian Pacific Kansas City Limited (NYSE:CP), valued at $157,082,967. This investment accounted for 4.3% of Chilton’s total portfolio, according to regulatory filings.
5. The Home Depot, Inc. (NYSE:HD)
Chilton Investment Company’s Stake Value: $224,739,732
Number of Hedge Fund Holders: 70
Ranking 5th in our list of the safe stocks to buy according to billionaire Chilton is The Home Depot, Inc. (NYSE:HD). The Home Depot, Inc. (NYSE:HD) is a leading home improvement retailer offering a wide range of products and services for home renovation and repair, with a strong focus on both in-store and e-commerce solutions. Since 1993, The Home Depot, Inc. (NYSE:HD) has grown nearly ninefold, reaching 2,337 stores by the end of Q1 2024. This expansion, coupled with increased revenue, has driven rising earnings, allowing The Home Depot, Inc. (NYSE:HD) to return significant capital to investors consistently.
The Home Depot, Inc. (NYSE:HD) is set for continued growth with its focus on expanding e-commerce, an efficient supply chain, and effective customer loyalty programs. The Home Depot, Inc. (NYSE:HD) also gains from current home improvement trends, particularly in a high-interest rate environment where homeowners prefer to renovate instead of moving. The Home Depot, Inc. (NYSE:HD) is one of the safe stocks to buy according to billionaire Chilton. As of the end of Q1 2024, Chilton Investment Company held 585,870 shares of The Home Depot, Inc. (NYSE:HD), valued at $224,739,732. This investment accounted for 6.15% of Chilton’s total portfolio, according to regulatory filings.
Polen Focus Growth Strategy stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q2 2024 investor letter:
“In the second quarter, the top relative contributors to the Portfolio’s performance were all names we do not hold: The Home Depot, Inc. (NYSE:HD), Meta Platforms, and AbbVie. With Home Depot, much of the quarter’s weakness came in April, as a higher-than-expected inflation reading caused investors to question the likelihood of imminent rate cuts in 2024. Given Home Depot’s sensitivity to interest rates, as it relates to home improvement projects, the stock sold off in the period.”
