Here I chose three companies with high-quality fundamentals and a consistent history of returning value to shareholders. All three companies trade at least 14% off their 52-week highs and meet a variety of appealing criteria:
- Positive free cash flow (FCF) per share and operating income per share.
- Dividend coverage ratios of 170% or higher.
- No negative one-, three- of five-year dividend growth.
Let’s take a one-by-one look at the three names I chose.
One king of private equity off its highs
KKR & Co. L.P. (NYSE:KKR)
, mostly known as KKR & Co. L.P. (NYSE:KKR)
, is now 15.5% down from its 52-week high. The company represents a good long idea if you are interested into having an asset manager in your portfolio. Having much more capital than any of its peers ($7.1 billion), the company can take advantage of various profitable opportunities that are restricted for most asset managers. Besides, the company is growing its non-private-equity arm at an incredibly fast pace (assets under management in this arm went from $16 to $32 billion in just two years). Most importantly, the company is ready to keep distributing cash to its shareholders. With a high 5.77% cash dividend yield (up by 97% year over year), a dividend coverage ratio of 193% and trading at 8.8 times P/E, I think KKR & Co. L.P. (NYSE:KKR)
is the best stock in the asset-management space.
Price does not reflect the huge opportunities ahead
Inter Parfums, Inc. (NASDAQ:IPAR)
, which is 14% off its 52-week highs, looks cheap taking into account the company’s opportunities ahead. Inter Parfums, Inc. (NASDAQ:IPAR) is a multi-brand perfume maker and marketer (Mont Blanc, Lanvin, Dupont, among others) with healthy top-line growth and a rock-solid balance sheet.
The company is growing sales both organically and through additional licensing opportunities. Besides, it has great potential for margin expansion. As I mentioned before, Inter Parfums, Inc. (NASDAQ:IPAR) offers strong balance sheet and earnings growing at full speed (first-quarter EPS doubled from last year). With net sales increasing by 29% year over year (yoy) to $214 million and trading at 23 times P/E, I think Inter Parfums, Inc. (NASDAQ:IPAR) is one stock to hold in your watch-list. On top of growth, the company has not forgotten about its shareholders. Inter Parfums, Inc. (NASDAQ:IPAR) is growing its 1.65% cash dividend yield at a 12.5% annual pace.
Driving FCF and dividend growth.
Marathon Petroleum Corp (NYSE:MPC), the oil refiner and marketer which was spun off from Marathon Oil Corporation (NYSE:MRO) in 2011, is 27% off its 52-week high.