Despite the fact that Brookfield Business Partners stock has corrected more than 22% from its high in October, it has still delivered more than 18% in annualized returns since 2017. In other words, the stock has delivered a total return of more than 40% in about two years’ time!
This outperformed the U.S. market, which delivered annualized returns of about 15% in the period and certainly outperformed the Canadian market that performed worse than the U.S. market.
Brookfield Business Partners aims for returns of 15-20% for its investments, which means that if you buy the stock on meaningful corrections, you may get even greater long-term returns! And right now, it has corrected.
BBU.UN data by YCharts. Comparing the price action of BBU.UN since inception with the U.S. and Canadian markets.
Brookfield Business Partners is a business services and industrials company that invests across multiple industries. Its businesses offer construction services, facilities management and real estate services, water and wastewater services, and much more.
It’s a global business with assets across North and South America, the U.K. and Europe, Asia Pacific and the Middle East. It aims to acquire market leaders or businesses whose operations can be improved upon. Ultimately, it focuses on profitability and sustainability of margins and cash flows.
Brookfield Business Partners is a value investor and will sell interests in businesses when the businesses are fully valued and then recycle the capital in better opportunities.
Brookfield Business Partners is always on the lookout to buy businesses with potential. In fact, just last month, along with its institutional partners, it announced to acquire up to 100% of Healthscope, a market leader in private healthcare services in Australia, for US$4.1 billion. Healthscope has a long-term track record of stable growth that’s expected to continue.
In late 2018, Brookfield Business Partners (together with institutional partners and Caisse de dépôt et placement du Québec, an institutional investor) announced to acquire Johnson Controls’ Power Solutions business for about US$13.2 billion.
The Power Solutions business makes batteries for global automakers and aftermarket distributors and retailers for use in almost all types of vehicles, including hybrid and electrical models. It’s believed to be a durable business that generates largely stable cash flows.
Last year, Brookfield Business Partners more than doubled its funds from operations per unit from US$2.22 in 2017 to US$5.67. Apparently, it benefited greatly from improved results in its industrials segment and acquisitions that it made during the year.
Brookfield Business Partners is top notch. However, the nature of its business can lead to volatile earnings and cash flow at times. That’s why the stock may be more volatile than what some investors would like.
With the stock down significantly, it’s a great time to buy Brookfield Business Partners for investors with a bigger appetite for risk that are focused on growth and price appreciation.
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Fool contributor Kay Ng owns shares of Brookfield Business Partners L.P. Limited Partnership Units. The Motley Fool owns shares of BROOKFIELD BUSINESS PARTNERS LP.