According to its latest 13F filing with the Securities and Exchange Commission, the Bill & Melinda Gates Foundation Trust holds significant positions in Caterpillar (NYSE:CAT), Ecolab (NYSE:ECL), and UPS (NYSE:UPS). Given that Warren Buffett is a trustee of the foundation, it's definitely worth retail investors' time to look at the Trust's portfolio and consider taking some cues from it. Therefore, let's examine those three industrial stocks to see if they're good values to purchase today.

Caterpillar

This massive manufacturer of construction, mining, transportation, and energy equipment is definitely in recovery mode in 2021. Its retail sales growth is trending upward and the reduction in dealer inventory of $1.1 billion in the fourth quarter was far better than management's expectations for a decline of $700 million. (Caterpillar sells through independent dealers, so when those dealers' inventories decline significantly, it implies they will start ordering more equipment again soon.)

Construction equipment at work.

Image source: Getty Images.

Moreover, when Caterpillar's sales trends hit the bottom of a trough and then start to turn upward, that's usually a good time to be invested in the company. Throw in the potential for a major federal infrastructure bill and a cyclical recovery in mining equipment sales, and it's clear why some investors are expecting good things from Caterpillar.

CAT Chart

Data by YCharts

Indeed, everything points to the stock having a good 2021 -- it's already up nearly 12% year to date as I write. If I was a betting man, I'd say that Caterpillar's stock could have an excellent year, but as an investing man, I think there's also cause for some caution here.

For starters, the market appears to have priced in a cyclical recovery already, but it's far from clear whether it will be as strong as the rebounds of previous cycles. For example, coal mining (a challenged industry) has traditionally been a big buyer of mining machinery, and in the oil and natural gas segment, budgets remain constrained. Meanwhile, the latest Architecture Billings Index (ABI) from the American Institute of Architects shows that architectural firm billings continued to decline month-on-month in December. For reference, the ABI as an indicator tends to lead nonresidential construction activity by a year or so.

All told, there's good reason to suspect that Caterpillar's recovery might not be quite as strong as investors seem to be pricing in.

Ecolab

The food safety, hygiene, and clean water company is a bit of an odd business in the context of the COVID-19 pandemic. On the one hand, it's one of the leaders in keeping environments healthy and clean. On the other hand, its significant exposure to the lodging, restaurant, and hospitality industries means many of its customers are continuing to suffer as social distancing efforts remain vital.

Moreover, if one result of the pandemic is some sort of structural shift in consumer behavior toward less dining out and travel, then Ecolab could lose business in the longer term.

These factors can be seen when looking at the sales trends by segment.

Business segment

Q4 2020 Adjusted Sales Change (YOY)

 Q3 2020 Adjusted Sales Change (YOY)

End Markets

Global industrial

(3%)

(3%)

Water, food and beverage, downstream, and paper

Global institutional and specialty

(22%)

(22%)

Includes lodging, restaurants, and hospitality

Global healthcare and life sciences

22%

29%

Healthcare, life sciences

Other

(8%)

(12%)

Pest control, textile care

Total

(8%)

(6%)

N/A

Data source: Ecolab presentations.

Given the uncertainty around what sort of economic recovery might be in the offing, Ecolab's management declined to give any earnings guidance when it delivered its fourth-quarter report, but Wall Street analysts have adjusted their forecasts for diluted EPS. The consensus now is that it will rise from $4.02 in 2020 to $5.33 in 2021. As current share prices, that has Ecolab trading at almost 40 times forward earnings, which strikes me as pretty rich for a company with some uncertainty around its prospects.

UPS

Interestingly, the Gates Foundation not only has a large stake in UPS, it also has a significant position in its chief rival, FedEx. The two obviously have a lot in common, not least that they are both grappling with how to deal with the margin pressures brought on by the growth of e-commerce shipping volumes. The online retail trend is both an opportunity and a challenge for them. 

Parcels outside a home.

Image source: Getty Images.

That said, UPS CEO Carol Tome has made it very clear that her main focus is sweating her company's assets more in order to improve margin performance. There's evidence that UPS is already making progress on that front. For example, revenue growth has been stronger than volume growth for the last two quarters in the key U.S. domestic package segment.

Further margin improvements appear achievable -- there's plenty of e-commerce volume around, and the will is there. And with the stock trading at less than 18 times estimated free cash flow for 2021, UPS looks like a good value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.