Is ARCC a good stock to buy? We came across a bullish thesis on Ares Capital Corporation on X.com by @MoneyShow. In this article, we will summarize the bulls’ thesis on ARCC. Ares Capital Corporation’s share was trading at $18.49 as of March 11th. ARCC’s trailing and forward P/E were 9.94 and 9.58 respectively according to Yahoo Finance.
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Ares Capital Corporation is a business development company specializing in growth capital, acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. ARCC presents a compelling high-yield investment opportunity for 2026, leveraging its position as one of the largest and most established Business Development Companies (BDCs). The company operates a diversified private credit portfolio, lending to small and mid-sized businesses across 27 industries, and supports recurring distributions through disciplined underwriting.
While BDCs face three primary concerns—lower Federal Reserve interest rates, a potential slowdown in small business performance, and broader private credit volatility—Ares is well-positioned to navigate these challenges. Floating-rate loans mitigate the impact of lower rates, while economic weakness may actually channel stronger small businesses toward alternative lenders like Ares, whose conservative risk management provides an edge. Private credit valuation concerns are further addressed through Ares’ gold-standard approach, employing four independent valuation firms on a rotating basis to ensure accurate pricing across its portfolio.
Credit quality remains robust, with non-accruals at just 1.7% of cost, below both the industry average and Ares’ historical norms. Its highly diversified exposure, spanning 587 businesses and multiple sectors, combined with a low 1.02x leverage ratio, provides resilience and the ability to maintain dividends under most scenarios. Historically, Ares has experienced only four quarterly losses since inception in 2004, with annualized debt losses averaging less than 20 basis points.
With a recent dividend yield exceeding 9%, the company offers a strong income foundation, supported by a significant spillover income cushion that covers more than two quarters of dividends. Overall, Ares Capital combines proven credit discipline, diversification, and income reliability, making it an attractive cornerstone for investors seeking high-yield exposure.
Previously, we covered a bullish thesis on BlackRock, Inc. (BLK) by Kroker Equity Research in February 2025, which highlighted its diversified asset management, strong inflows, and growth from iShares and Aladdin®. BLK’s stock price has depreciated by approximately 4.11% since our coverage amid broader market volatility. @MoneyShow shares a similar view but emphasizes Ares Capital Corporation’s (ARCC) high-yield credit strategy and resilient dividend profile.
Ares Capital Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held ARCC at the end of the fourth quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of ARCC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ARCC and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
