KKR: Best of breed in private equity
This high yielding firm is a play on increased buyout and financing activity in the markets.
By 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
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.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
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.