Brookfield Asset Management (BAM) is one of those Canadian stocks that can offer you a better bang for your buck.
The Toronto-based alternative asset manager provides investors with exposure to a wide range of alternative assets (think real estate, renewable energy projects, infrastructure, and other “real” or tangible income-producing assets), many of which provide a solid and lowly correlated return versus common stocks.
With bonds and other risk-free securities likely to remain unattractive for years to come, Brookfield’s portfolio of alternative investments are that much more appealing.
Shares of BAM are up 70.4% over the past year. Despite the momentum and now-heightened valuation, I am bullish on the name, and don’t see any fundamental reason why BAM stock would surrender a sizeable portion of its recent gains. (See BAM stock charts on TipRanks)
Brookfield’s Investor Day
Recently, Brookfield had its annual Investor Day, laying out a plan to double in size over the next five years. For a $87.4-billion company, such a plan is remarkable.
If the company can deliver on its plan, investors could be in for more than 20% in annualized returns through 2026. I think the odds are on BAM’s side, given that the tables could continue to be tilted in favor of alternative asset managers in a low-rate environment.
Should the right cards fall into place, Brookfield may reach its goal ahead of schedule, and at these modest valuations, the stock could prove to be a bargain that’s worth travelling north of the border for.
Recently, Brookfield announced that it had formed a strategic partnership with private real estate investment company Elion Partners worth around $1 billion. This is just one of many deals that will likely push BAM closer towards its ambitious five-year goal.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, BAM stock comes in as a Strong Buy. Out of seven analyst ratings, there are six Buy recommendations, and one Hold recommendation.
The average BAM price target is $62.05. Analyst price targets range from a low of $48.36 per share, to a high of $71 per share.
Bottom Line
There’s a lot of appeal in real assets. In this market, where bonds will earn you next to nothing, there’s a strong case for betting on a firm that’s effectively a one-stop shop for alternative assets.
Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.
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