Waiting around for a dip in markets or a specific stock on your radar can be a great way to get in on a wonderful business at a price that’s even more wonderful.
Of course, there’s nothing against buying a name at fresh highs, provided that the fundamentals have also appreciated by a similar amount or even a bit more. But, at the end of the day, it’s more about what you pin a stock’s intrinsic value at and how the current market price compares.
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Brookfield Corp.
Either way, if you’re given a dip, things could have the potential to extend to the downside. In the case of Brookfield Corp. (TSX: BN), which fell into bear market territory earlier in the year (tanking just north of 22% from peak to trough) before recovering most of the ground, I still think the $141 billion behemoth is worth scooping up now and on any further bumps in the road. Indeed, it has been a choppy past year for shares of BN, to say the least.
The alternative asset managers have been under quite a bit of pressure. And while a name like Brookfield does have a complex mix of alternative assets, I still think that investors are getting a price of admission that’s quite modest. And when you consider the AI infrastructure tailwinds that could help propel Brookfield Corp. to greater risk-adjusted growth, I do think that any extended periods of turbulence should be viewed as opportunistic by value investors looking to play the long game.
As the great AI data centre buildout moves ahead, I do think that a firm like Brookfield Corp. is well-positioned to deliver, as the AI chokepoints (think industrial real estate and clean energy, just to name a few) prove a profitable place to put new money to work. Indeed, when it comes to the AI supercycle and buildout, the alternative asset managers are very well-positioned over the long run.
High-quality alternative assets on the cheap
Real estate, energy production, transmission, and all the sort are necessary. And there’s a good chance that demand could continue to be off the charts in the near future. Today, shares are down 6.5% from their January highs. And while it would have been nice to buy when shares of BN were in a bear market, I still think there’s a strong case for buying, especially for those looking for a cheaper backdoor into the AI infrastructure trade.
The company posted a robust quarter that led to a V-shaped recovery from the bearish descent. With huge cash flows coming in across the board, from real estate, private credit, and equity, and other areas, it’s hard not to be a bull, especially as the firm reinvests capital into areas that face generational tailwinds.
As the company keeps making smart investments, including the recent SpaceX stake, I think it’s becoming a bit hard to steer clear of the firm. It has a vast portfolio of cash flow-generative projects and, right now, the shares seem like a bargain at less than 12 times forward price-to-earnings (P/E).
