Load Up on This “Dream” Business Right Now

Join TradeAlgo's Free Live Trading Session ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, A Volatile Wednesday? Apple fell flat in its opportunity to electrify the share price with yesterday’s event that revealed some new AI features, with the price falling 2%. Either the AI frenzy is cooling, or Apple’s AI features didn’t impress investors. Or are traders just holding back their bets until Wednesday’s major catalysts? Wall Street expects volatility to return with full force on Wednesday when the latest reading of the consumer price index will be released — along with the Federal Reserve’s rate decision. While the Fed is expected to keep rates unchanged, investors will pay attention to officials’ updated quarterly rate projections. The last one averaged three rate cuts this year. (Photo: Drew Angerer / Getty Images) The labor market remains robust, but the economic data indicated some slowdown. However, the Fed is unlikely to make a proclamation. They will probably continue its “wait and see” messaging. Multiple officials already said that they’ll need several months of continuing trends before feeling confident to cut rates. - “The interest-rate guessing game goes on,” said Chris Larkin at E*Trade from Morgan Stanley. “Even the friendliest inflation numbers probably won’t push the Fed to act any sooner than September.” Wall Street pushed the first rate projection to December (from November) after Friday’s hot jobs report. Now is a sticky situation in the stock market. A red-hot economy could mean higher earnings for the companies, but it also could keep inflation elevated. The problem with higher inflation is that keeping rates high for long makes it more difficult for the economy to bounce back quickly if there’s any slowdown. - “The equity market has had a terrific year, but there is a current pause in the rally as the Fed comes into question,” said David Donabedian at CIBC Private Wealth US. “There is a real chance if the economy does not slow down there will be no rate cut this year.” Load Up on This “Dream” Business Right Now Today’s Stock Pick: KKR & Co. (KKR) KKR is perhaps one of the most successful private equity firms out there. Many finance followers know KKR through a business classic book, Barbarians at the Gate, where the PE firm pulled off the largest leveraged buyout of RJR Nabisco at that time. That LBO ended up delivering a subpar return to KKR’s investors. The founding team vowed not to invest too much in a single business for a fund ever again. Sure enough, the firm has been unstoppable since then. It has tentacles all over the world with 25 offices right now. (Source: KKR) Just look at its growth since 2010. It had just four products in 2010 — three private equity and one credit and liquid strategies. Since then, the number of products exploded for PE, Real Assets and Credit and Liquid Strategies. You can see them all in the graphic below: (Source: KKR) How well do they invest? Well, they crushed benchmarks in all of their select mature funds. Americas XII Fund delivered a 25% gross IRR since its inception through December 31, 2023. Some asset classes have lower returns by nature (such as real estate), but it crushed benchmarks by four times or more. (Source: KKR) What makes KKR a phenomenal grower is its growing assets under management. It grew 18% CAGR since 2010. Meaning? More fees to generate profits for KKR’s shareholders. (Source: KKR) In fact, management fee grew 30% CAGR from 2019 to the end of 2023: (Source: KKR) Naturally, it led to an incredible stock price gain. Since its April 2021 Investor Day, the stock almost doubled. Annualized total return was 2.6 times higher than the S&P 500. More importantly, the P/E multiple barely expanded. So, it wasn’t an artificial gain due to multiple expansion. (Source: KKR) So, where did the gains come from? Strong business fundamentals. Management fees doubled since 2020. Fee related earnings rose from $1.3 billion to $2.4 billion, while embedded gains grew 36%. (Source: KKR) The next question is… Can the KKR maintain the growth? The future looks bright. KKR forecasts to raise $300+ billion in new capital from 2024 to 2026. It is a huge growth since it had $553 million in assets under management as of December 31, 2023. Unsurprisingly, KKR expects adjusted net income per share to grow rapidly (~30% CAGR) through 2026. It is a phenomenal value for a stock that’s trading in 20’s P/E. (Source: KKR) The biggest driver of KKR’s growth will come from Asia. Asia is expected to drive ~60% of total global growth through 2028E. However, alternatives AUM as a % of GDP is extremely low at 9% — compared to 26% in North America. Meaning? Massive growth opportunities in Asia Pacific. KKR is prepared to seize it. (Source: KKR) Bottom line: KKR offers an amazing growth/value opportunity in the stock market. It expects to grow its adjusted net income by 30% CAGR in the next few years, but the stock is now trading at a 24 P/E. I think you will have hard time finding a value like this in the stock market. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](