We recently published a list of 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. Since Jacobs Solutions Inc (NYSE:J) ranks 8th in the list, it deserves a deeper look.
Billionaire George Soros has been one of the most active and divisive figures in the Wall Street. Often a right-wing target, the billionaire handed over the control of his $25 billion empire to his son Alexander Soros last year. The 93 year-old Hungarian American is known as the philosopher investor in the Wall Street, mainly due to his contributions to philosophy and his deep desire to leave his mark in the world of philosophy, which many believe he fulfilled thanks to his General Theory of Reflexivity for capital markets.
George Soros founded Soros Fund Management in 1970. Since its inception through 2010, the fund posted on average a 20% annual rate of return. A Wall Street Journal report earlier this year said that Soros Fund Management has posted a compound annual return of 13.5% over the past three years through June 30, 2023.
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George Soros in his book The New Paradigm of Financial Markets wrote a chapter titled “Autobiography of a Failed Philosopher” in which he talked in detail about how many, including his son and his biographer, started accepting the idea that Soros was a failed philosopher. Soros talks in detail about his childhood, his relationship with his father who at one point, according to Soros, lost all ambition in life and did not amass any wealth. A Jew by birth, Soros decided to come to the UK after the Nazi occupation of Hungary. Soros’ first interactions with philosophy started when he was impressed by the works of Karl Popper. But Soros’ dreams of creating a career in philosophy could not realize for several reasons, some of which he talks about in his book:
“I would have preferred to stay within the safe walls of academe—I even had a teaching assistant job prospect at the University of Michigan in Kalamazoo, but my grades were not good enough, and I was forced to go out into the real world. After several false starts, I ended up working as an arbitrage trader, first in London and then in New York.* At first I had to forget everything I had learned as a student in order to hold down my job, but eventually my college education came in very useful. In particular, I could apply my theory of reflexivity to establish a disequilibrium scenario or boom-bust pattern for financial markets. The rewarding part came when markets entered what I called far-from-equilibrium territory because that is when the generally accepted equilibrium models broke down.”
For this article we scanned Billionaire Soros’s Soros Fund Management’s Q1 portfolio and chose its top 9 stock picks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jacobs Solutions Inc (NYSE:J)
Billionaire George Soros’s Q1’2024 Stake Value: $53,936,017
Engineering solutions company Jacobs Solutions Inc (NYSE:J) is one of the notable stocks in billionaire George Soros’ Q1 portfolio. Soros’s fund owns a $54 million stake in Jacobs Solutions Inc (NYSE:J). In May Jacobs Solutions Inc (NYSE:J) reported second quarter results. Adjusted EPS in the period came in at $1.91, beating estimates by $0.05. Revenue in the quarter jumped 4.9% year over year to $4.3 billion, meeting estimates. Jacobs Solutions Inc (NYSE:J) plans to spin off its Critical Mission Solutions and Cyber & Intelligence Government Services business to focus more on infrastructure and sustainability business and expand margins. Analysts expect the company to see a 300bps margin expansion due to the spin-off.
Analysts are especially bullish on the company’s water business. During the first quarter, the company’s water business bookings jumped on a YoY basis. Jacobs’ Direct potable reuse (DPR) is gaining popularity in the US, Europe, Australia and Asia as it can send highly treated sewage water back into drinking water distributions. The company has won a $191 million project in Florida for a water reclamation facility.
As of the end of the first quarter of 2024, 34 hedge funds reported owning stakes in Jacobs Solutions Inc (NYSE:J). Jacobs Solutions shares have a forward P/E of 17.32, lower than the industry median of 18.66. Wall Street expects the company’s earnings to grow 10.00% next year and by 9.90% on a per-annum basis over the next five years. This makes Jacobs Solutions Inc (NYSE:J) an undervalued play. Jacobs is one of the best stocks to buy in 2024 according to Soros’s fund.
Madison Sustainable Equity Fund stated the following regarding Jacobs Solutions Inc. (NYSE:J) in its fourth quarter 2023 investor letter:
“Jacobs Solutions Inc. (NYSE:J) was down after missing earnings expectations and providing 2024 guidance below expectations. While revenue growth remains strong with high single digit growth, costs were higher than expected mostly related to the carrying cost of the upcoming spin of its government services business. We estimate that post the spin, Jacobs will have a higher growth rate and higher margin profile with an improved balance sheet.”
Overall, Jacobs Solutions Inc (NYSE:J) ranks 8th in Insider Monkey’s list of 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. You can visit 9 Best Stocks to Buy in 2024 According to Billionaire George Soros to see other stock picks of Billionaire George Soros. While we acknowledge the potential of Jacobs Solutions Inc (NYSE:J), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Jacobs Solutions Inc (NYSE:J) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.