Time to Buy a “Blood in the Streets” Play

The stock market pullback is getting ugly. With pullbacks deepening into corrections, investors want to know where to go for the best returns on the market’s next rebound.

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  • Historically, a handful of companies have used these dire and fearful market conditions to set themselves up for big profits when the outlook is much brighter. A select group of investment managers in particular tend to have a great track record for navigating tough markets.

    One such player is Blackstone (BX). The asset manager’s expertise in real estate, private equity, and hedge fund strategies places it in a position to come out ahead from today’s market fears.

    Shares are down nearly one third from their peak last year, but the stock is still up 55 percent, far in excess of the S&P 500’s return. And shares trade at just 16 times earnings, allowing investors to cheaply invest among an astute fund manager with decades of market outperformance right now.

    Best of all, the company has about $136 billion in cash right now, just waiting to take advantage of the deals emerging in the latest market washout.

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  • Action to take: Shares look attractive at today’s prices, especially with earnings up 87 percent and revenue up 52 percent compared to a year ago. Plus, today’s investors can now get a starting yield of 3.5 percent, which can likely grow in time.

    For traders, the September $140 calls, last going for about $4.25, offers mid-to-high double-digit returns on a rebound in shares in the coming months.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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