Top-Performing Dividend Payers in Finance with the Most Upside Potential (APO, AGO, FIG)
It is not unusual for stocks on a tear to overrun their mean price targets, which is a signal of how far analysts on average expect the share price to climb.
Some of the top-performing financial stocks over the past six months that pay dividends, such as CapLease (NYSE: LSE), NYSE Euronext (NYSE: NYX) and Radian Group (NYSE: RDN), have done just that. Others are at or near their mean price targets.
But analysts believe that Apollo Global Management (NYSE: APO), Assured Guaranty (NYSE: AGO) and Fortress Investment Group (NYSE: FIG) still have some room to run, despite rising more than 60 percent in the past six months.
Apollo Global Management
This private equity firm focused on leveraged buyouts and acquisition of distressed properties sports a market capitalization of a little more than $3 billion. The dividend yield is near 1.2 percent. The price-to-earnings (P/E) ratio is lower than the industry average. But so is the operating margin, though the return on equity is more than 44 percent.
The short interest in Apollo Global Management was about one percent of the float as of the May 15 settlement date. That was the second lowest number of shares sold short so far this year, after declining more than nine percent from the previous period. The average daily volume was the highest in a least a year.
The consensus recommendation of the analysts that follow the stock and were polled by Thomson/First Call is to buy shares, and it has been for at least three months. None of the analysts recommend selling shares. The mean price target is more than 21 percent higher than the current share price. That target would be a new multiyear high.
The share price is up about 34 percent year-to-date, though it has pulled back about nine percent from the 52-week high. Over the past six months, the stock has outperformed peers Blackstone Group (NYSE: BX) and Kohlberg Kravis Roberts (NYSE: KKR).
This provider of credit protection products has a market cap of more than $4 billion and a dividend yield of about 1.8 percent. The P/E ratio is about 9.9, but note that the long-term earnings per share (EPS) growth forecast is only about three percent. And the return on equity is about 10 percent.
The short interest in this Bermuda-based company was about two percent of the total float at mid-May, after rising more than 25 percent from the previous period. That rise eliminated a similar decline in the number of shares sold short in the period before that. But the days to cover slipped to less than two for the first time since February.
Of the six analysts surveyed, four recommend buying shares, with two of them rating the stock at Strong Buy. And the analysts think shares have plenty of headroom, as their mean price target is more than 21 percent higher than the current share price. Shares have not traded at that level since November of 2009.
The share price is more than 56 percent higher than at the beginning of the year, though it has retreated about five percent from a recent 52-week high. Over the past six months, the stock has outperformed the broader markets, but it has narrowly underperformed competitor MBIA (NYSE: MBI).
Fortress Investment Group
This investment management firm is headquartered in New York City, and it has a market cap of less than $2 billion. Its dividend yield is near 3.6 percent. The long-term EPS growth forecast is about 15 percent, and the P/E ratio is lower than the industry average. The return on equity is more than 18 percent.
The number of shares sold short as of the most recent settlement date represented less than two percent of the total float, but that was the second highest level of short interest so far this year after rising about 30 percent in the previous month. The days to cover was about two.
Three of the five analysts polled recommend buying shares; none recommend selling them. The mean price target indicates that the analysts see more than 14 percent more upside potential. That target would be a new multiyear high for Fortress Investment Group.
Though the share price is more than 61 percent higher year-to-date, shares have faced resistance at $7.50 for the past few weeks. Still, the stock has outperformed the likes of BlackRock (NYSE: BLK) and State Street (NYSE: STT), as well as the broader markets, over the past six months.
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