Apollo Global Management Inc. and Capital One Financial Corp. Top KBW’s Best Ideas List for 2024

Apollo Global Management Inc. and Capital One Financial Corp. have been recognized as the leading financial companies on KBW's prestigious best ideas list for 2024. In a research note released on Wednesday, it was revealed that these two companies have emerged as the standout performers among a total of nine listed firms.

Apollo Global Management Inc.: Opportunities for Growth

With an impressive market capitalization of approximately $53 billion, private-equity firm and annuities manager Apollo Global Management Inc. (APO) offers a multitude of growth opportunities. Analysts predict a promising 20% total return for 2024, thanks to the company's strategic focus on a spread-oriented strategy, utilization of third-party capital, enhanced growth potential through a broader platform, and an overall improved return-on-equity profile. Market valuation in this case seems fixated on traditional life insurance multiples, thereby overlooking the true potential of Apollo Global Management Inc.

Capital One Financial Corp.: Strong Outlook

Credit-card giant Capital One Financial Corp. (COF), boasting a market capitalization of about $50 billion, is projected to deliver an impressive total return of 23% in 2024. KBW expects the company to capitalise on improved credit trends, while also enhancing returns through the resumption of share buybacks. Furthermore, they predict that as the effects of growth math subside, Capital One Financial Corp. is primed for significant growth.

KBW has reiterated its outperform ratings for both Capital One Financial Corp. and Apollo Global Management Inc., confirming their positions as top picks on the best ideas list. Other components of the list with outperform ratings include residential loan services company Mr. Cooper Group Inc. (COOP), retirement services and insurance specialist Corebridge Financial Inc. (CRBG), and financial technology company Fidelity National Information Services Inc. (FIS).

Additionally, the list includes large regional bank KeyCorp (KEY), trading platform provider Nasdaq Inc. (NDAQ), and regional banks Prosperity Bancshares Inc. (PB) and Webster Financial Corp. (WBS), all of which have been highly regarded with outperform ratings.

Amongst all the listed companies, Corebridge Financial Inc. has received the highest estimate for a total return in 2024, with an impressive projected figure of 33%.

The future looks bright for these nine financial companies, as they continue to attract attention and garner positive ratings from industry experts. With their distinct strategies and growth potential, Apollo Global Management Inc., Capital One Financial Corp., and the rest of the best ideas list components are well-positioned to thrive in the coming years.

Corebridge Set to Thrive in a Low Interest Rate Environment

Corebridge, a former unit of AIG Inc., is poised for growth in the industry of annuities, life insurance, and asset management. According to KBW, the company benefits from favorable earnings-per-share momentum due to improved credit spreads resulting from falling interest rates. Besides this, Corebridge is focused on cost savings and returning capital to its shareholders.

BlackRock Outperforms Franklin Resources

KBW reaffirms its outperform rating on BlackRock, the leading asset management giant, and an underperform rating on Franklin Resources, an investment manager. This distinction positions BlackRock as a better prospect for ongoing fixed income investments. Furthermore, KBW highlights BlackRock's potential as an acquirer to enhance its growth.

BlackRock's Unique Positioning

KBW expects a surge in fixed income flows and tips passive products to capture a greater share of these inflows. Due to its unique positioning, BlackRock is considered the frontrunner in this space. Additionally, BlackRock plans to actively pursue acquisitions to bolster its technology and private market capabilities.

Franklin Resources' Mixed Performance Raises Concerns

Franklin Resources' recent track record has been inconsistent, leaving room for concern over potential low-quality transactions. Even after a 27% increase in value in recent weeks, KBW indicates that Franklin Resources may have reached its full valuation.

Underperform Ratings for Other Stocks

KBW has also given underperform ratings to four other stocks: Brighthouse Financial Inc., Brown & Brown Inc., PNC Financial Services Group Inc., and SoFi Technologies Inc. These companies operate in the sectors of life insurance, annuities, insurance brokerage, regional banking, and student loan refinancing, respectively.

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