KKR: Best of breed in private equity

This high yielding firm is a play on increased buyout and financing activity in the markets.

By TheStockAdvisors May 7, 2013 10:02AM

Arrow Up © Nicholas Monu iStock Exclusive Getty ImagesBy Mark Skousen, Forecasts & Strategies


In the past year, we have been big fans of private equity stocks and business development companies. These specialty finance companies are growing fast and increasing their dividends.


They are taking full advantage of the Federal Reserve's easy money policies and the banking industry's reluctance to finance small businesses.


KKR & Co. (KKR) is a New York global private equity investment firm specializing in acquisitions, leveraged buyouts, managed buyouts, special situations, growth equity, as well as mature and middle market investments.


It is the best of breed, beating out its competitors in practically every category: return on equity (20.3%), operating cash flow ($6.2 billion) and dividend yield of 6%.


It's extremely rare to find a leader that outperforms in every category and is still the cheapest in terms of price-to-earnings ratio (under 10).


Last month, the company beat profit estimates and reported that assets under management rose to a record $78 billion.


In addition, KKR announced that it would initiate paying quarterly distribution totaling 40% of its balance sheet income.


Despite the run-up, KKR is still undervalued, based on its expected dividend yield (6% or better), its price-to-earnings ratio (7-8), and its PEG, which is price-to-earnings-to-growth, ratio (0.17). Anything less than one is considered an excellent PEG .


More from TheStockAdvisors.com

Tags: KKR
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

104
104 rated 1
252
252 rated 2
457
457 rated 3
639
639 rated 4
495
495 rated 5
538
538 rated 6
704
704 rated 7
503
503 rated 8
350
350 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
TAT&T Inc9
COPCONOCOPHILLIPS9
DVNDEVON ENERGY CORPORATION9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.