Billionaire Bill Gates is betting more than $150 million on the long-term potential of these growth stocks

Bill Gates is one of the most familiar names on the Forbes list of billionaires. His claim to fame and fortune was microsoftHe led the company from its founding in 1975 until 2006, taking time away from his full-time position at the company to devote more time to building the company.

The Bill & Melinda Gates Foundation was established to help people in countries struggling with disease and poverty live healthier, more productive lives. Since 2000, the foundation has spent more than $53 billion toward this goal.

As of the end of 2023, the foundation trust that manages the foundation’s donated assets holds stocks worth $42 billion, including gifts from Warren Buffett. Berkshire Hathaway stock. The trust holds positions at several industry leaders, including Microsoft. walmartand fedex. These are the types of excellent companies that responsible foundations would expect to invest in to preserve and grow their assets in a relatively low-risk manner.

But the trust doesn’t shy away from taking swings at select growth stocks with huge upside potential. At year-end, the trust held a $149 million stake in South Korea’s leading e-commerce store. Coupang (CPNG 1.31%)$13 million in fast-growing sportswear brand. pending (Onon 4.63%). Let’s take a closer look to see why risk-averse foundations love this opportunity.

Coupang

If you’re looking for the safest growth stocks to buy to generate long-term profits, e-commerce is a great place to look for ideas. Over the past 20 years, the proportion of online shopping in total retail spending has gradually increased, but it is still only in its early stages, and this is clearly evident in Coupang’s growth history.

According to Euromonitor, Coupang is leading the Korean e-commerce market and is expected to grow at an average annual rate of 4% to reach $563 billion in 2027. The company is rapidly gaining share in this growing market. Over the past five years, Coupang’s annual sales have exploded from $4 billion to $24 billion. In the fourth quarter of 2023, it reported a 23% increase in revenue compared to the same period last year.

The Gates Foundation Trust held over 9 million shares as of the end of 2023 and has held no shares since first initiating a position in the first quarter of 2021.

Coupang’s management is growing its business responsibly in line with trust’s conservative investment approach. The company reported an adjusted profit of $465 million in 2023, even as it invested to expand its selection and fulfillment centers to meet demand. More profitable growth is possible given management’s high revenue benchmark to fund new growth initiatives within the business.

Another reason to like stocks is their value below the price. At selling price, Coupang is trading at less than 2 times its last 12 months’ sales, which is a fair entry point for investing in a leading e-commerce business with above-average growth prospects.

pending

The foundation trust holds 500,000 shares on-hold at the end of 2023. Identifying a consumer brand early in its growth path can be one of the most rewarding investment strategies. On’s recent growth marks its emergence as a global sportswear brand.

Although On is primarily known for its sneakers, it also designs clothing and footwear for travel, tennis, training, hiking and lifestyle. The Swiss-based sportswear brand is making waves globally, with sales growing 55% in 2023 at constant exchange rates.

On is noting the growing demand for alternatives to big sneaker brands such as: Nike and Adidas, which has struggled to grow revenue beyond the single-digit range in recent years. According to Statista, On has a huge share of the $135 billion market across sneakers and sneakers.

With annual sales of approximately $2 billion, On is on a long runway of growth. Footwear accounts for 95% of sales, but management is investing to expand into apparel, where sales grew 45% last year.

It’s worth noting that sportswear brands are lower risk than regular clothing companies, which may be more sensitive to fluctuations in fashion preferences. This would explain why the trust has decided to buy back the shares it holds from the third quarter of 2021. Top brands like Nike have been able to sustain above-average growth for decades, and On Holding may be next in line.