Lower corporate earnings are a ripe time for deals as businesses turn to strategies that will help them navigate through a tough patch.
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Private equity firm Blue Owl Capital (OWL) is finding support at the 50-day moving average, according to IBD MarketSurge. Shares have gained 24% so far this year and are in a buy zone after breaking out from a flat base’s buy point at 18.33.
The finance and investment management stock is one of 20 big caps that have netted strong gains without the volatility of smaller growth stocks.
The stock has outperformed the S&P 500, which has gained about 5% year to date. The stock’s relative strength line is also trending higher, showing that it’s outperforming the S&P 500 in more recent action.
Sales grew 25% to $494 million while earnings of 18 cents per share were 20% higher than the prior year. The stock gapped up on Feb. 9 after sales and earnings accelerated during the fourth quarter.
First-quarter results are due on May 2. Analysts expect earnings of 16 cents per share on sales of $475.8 million. For the full year, earnings estimates of 83 cents per share translate to 28% growth, while 2025 earnings are seen coming in at $1.03 per share, or 24% higher.
Blue Owl Capital provides financing for alternative-asset managers and growth capital for tech firms. Its services include direct lending, equity and other financial instruments to private capital managers and private equity real estate.
The company has over $165 billion in assets under management. Per the company’s data, the number of private-equity-backed companies has outpaced publicly listed companies since the 2008 global financial crisis.
Blue Owl Ranks First In Group
Blue Owl ranks first in the finance and investment management group.
This month, the company acquired Prima Capital Advisors, a real estate lender focused on commercial mortgage-backed securities, for $170 million. Blue Owl agreed to buy Kuvare Asset Management, an asset management services company for the insurance industry, for $750 million.
According to reports, M&A deals fell sharply in the fourth quarter of 2023, but there are opportunities in 2024 as rising costs and lackluster corporate earnings could lead businesses to streamline. Companies in industrials, life sciences and technology are in focus for 2024 deals. Also, deals may flow through when portfolio companies are spun off.
Mutual funds own 49% of outstanding shares. More funds have been buyers in recent weeks as well, as seen in Blue Owl’s top-notch Accumulation/Distribution Rating of A+. The Columbia Acorn Fund (ACRNX) owns OWL shares.
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