A new research report this past week from Bernstein Research [via The Street], provides insight into three equity names the firm believes have significant growth opportunities ahead.
Private equity firms Apollo Global Management LLC (APO), The Blackstone Group (BX) and KKR & Co. (KKR) are the best pure-play growth stocks in the financial services sector, Bernstein Research analysts said in its report that initiated each firm with a “Buy” rating. According to Bernstein’s analysis, these private-equity firms have significant growth opportunities ahead, especially in real estate and debt investing.
“We believe the market is undervaluing the going concern value of these firms and the significant growth opportunities ahead, both of which we view as practically free options at current market prices,” the analysts said, pointing out an average P/E ratio of below 11x forward earnings, compared with a 16x multiple for alternative investment firms.
Bernstein analysts also said all three firms are expected to offer cash distribution yields of more than 5%.
Price action: Shares of Apollo (forward P/E 10.37), The Blackstone Group (forward P/E 9.17) and KKR & Co. (forward P/E 8.72) closed at $31.00, $32.80 and $23.65, respectively, on Friday.