7. Ecolab Inc. (NYSE:ECL)
Bill & Melinda Gates Foundation’s Investment Stake: $1.3 billion
Number of Hedge Fund Investors In Q3 2024: 47
Ecolab Inc. (NYSE:ECL) is the water treatment specialty chemicals company that we mentioned in our introduction. While Gates’ family office sold the shares this year, the Foundation has not sold any Ecolab Inc. (NYSE:ECL) stock in 2024. The decision is grounded in reality as the shares are up 25% year-to-date despite muted economic activity that does not bode well for industrial companies. However, as broader economic activity has been muted for more than a year due to two-decade-high interest rates, Ecolab Inc. (NYSE:ECL) stands to benefit from pent-up demand. The potential demand unlocking was clear in the firm’s third-quarter earnings which saw its global industrial revenue grow $1.99 billion, or by 2.6% annually. The growth occurred despite the fact that while the US economy has managed to stave off a sharp downturn, other countries have not been so lucky. Another key factor that will drive Ecolab Inc. (NYSE:ECL)’s performance moving forward is customer inventories. They will provide insights into whether its customers are experiencing higher activity to start building inventories for an expected uptick in activity.
Ecolab Inc. (NYSE:ECL)’s management shared its future growth plans during the Q3 2024 earnings call. Here is what they said:
“Now I’d like to transition our attention from Q3 to what our teams are focused on to fuel long-term growth and margin expansion. Our growth engines in clean tech, high tech and biotech are showing strength and momentum, even if each are at the different stage of development.
In the clintech area, institutional and specialty as well as pest elimination are both delivering strong performance, growing 7% and 8%, respectively, with operating income margins north of 20%. Global High Tech, which includes data center cooling and water for microelectronics is growing at strong double digits. And in biotech, our Life Sciences business remains ahead of the curve in what we believe will be a huge long-term growth opportunity. Our innovation pipeline also continues to build as we shift our focus from renovation to breakthrough innovation. With nearly $1.5 billion, our 2024 pipeline is at record levels and laser-focused on the biggest opportunities across our clean tech, high tech and biotech platforms. Finally, our One Ecolab growth initiative, which seeks to leverage our digital technologies to deliver best-in-class business outcomes, operational performance and environmental impact that every customer location around the world is progressing very well.
Over the next few years, One Ecolab looks to more quickly unlock our current $55 billion penetration opportunity. Our early focus on our largest and fastest-growing certified customers is showing promising results with significant total value delivered for our customers and a great growth opportunity for Ecolab. With strong long-term business momentum, record free cash flow and the proceeds from the sale of the Surgical Drapes business, our balance sheet is in a very healthy position. This provides us with many options to allocate capital to organic and inorganic growth opportunities. On organic growth, we are well positioned to scale unique customer solutions like our AI dish machine program for QSR and circular water systems for data centers and microelectronic manufacturers.”
