With Strong Cash Flow, Blackstone Stock Poised to Rise?
Blackstone (BX) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
BX Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 5.4%, but Blackstone stock does
- Growth: Last 12 revenue growth of 13.5% – low growth, but this selection is all about high yield and margin
- Valuation: BX stock currently trading at 44% below 2Y high, 19% below 1M high, and at a PS lower than 3Y average.
Below is a quick comparison of BX fundamentals with S&P medians.
| BX | S&P Median | |
|---|---|---|
| Sector | Financials | – |
| Industry | Asset Management & Custody Banks | – |
| Free Cash Flow Yield | 5.4% | 4.3% |
| Revenue Growth LTM | 13.5% | 6.6% |
| Revenue Growth 3YAVG | 22.6% | 5.5% |
| Operating Margin LTM | 46% | 18.7% |
| Operating Margin 3YAVG | 44% | 18.2% |
| PE Ratio | 27.8 | 24.3 |
*LTM: Last Twelve Months
But What Is The Risk Involved?
While BX stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. BX took a hit of about 88% during the Global Financial Crisis, which is huge. In 2018, the stock dipped nearly 30%, and the Covid pandemic brought a drop close to 44%. During the inflation shock, it fell around 49%. So even with solid fundamentals, BX has shown it’s not immune to major sell-offs when things get rough. The risk is real, no matter how good the story looks. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read BX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
For more details and our view, see Buy or Sell BX Stock.
Stocks Like BX
Not ready to act on BX? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few year average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
Portfolios Win When Stock Picks Fall Short
Stocks soar and sink – the key is staying invested. A balanced portfolio helps you ride market volatility, boosts gains and reduces single stock risk.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.