We recently published a list of 10 Best Extremely Profitable Stocks to Buy Now. In this article, we are going to take a look at where Apollo Global Management, Inc. (NYSE:APO) stands against other best extremely profitable stocks to buy now.
Can the S&P Hit 7,000 By the End of 2025?
Ed Yardeni, president of Yardeni Research, appeared on CNBC on November 27 to share insights on the market’s anticipated performance in 2025. He emphasized the significance of staying invested despite existing risks and high valuations, noting that the economy has shown resilience and interest rates have stabilized.
Yardeni pointed out that many new investors are gravitating toward small and mid-cap sectors, which he considers a sound strategy due to their relative affordability. He also highlighted the S&P 493 stocks as being undervalued compared to the Magnificent Seven, asserting that the overall market outlook remains positive despite potential tariff fluctuations. He believes that tax cuts and deregulation could enhance corporate earnings.
Yardeni attributed much of the market’s potential growth to an ongoing productivity boom, which he described as still being in its early stages. He noted that productivity levels have improved significantly from nearly zero in 2015 to around 2% currently, with historical precedents suggesting that such booms can reach as high as 4%. This improvement is driven by advancements in technology, which he argues will continue to drive productivity gains.
READ ALSO: 10 Most Promising New Technology Stocks According to Hedge Funds and 10 Best Tech Stocks to Invest In On the Dip.
When discussing whether this boom is primarily driven by artificial intelligence (AI), Yardeni acknowledged AI’s importance but also pointed to other technological advancements in cloud computing, robotics, and automation as contributing factors.
He identified a shortage of skilled labor as a key driver of productivity growth and explained that technology has enhanced efficiency, allowing wages to rise faster than prices, thus stimulating economic activity. In his concluding remarks, Yardeni projected that the S&P 500 could reach 7,000 by the end of 2025 and potentially hit 10,000 by the end of the decade, reflecting his bullish outlook on market performance fueled by these economic dynamics.
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Our Methodology
To compile the list of the 10 best extremely profitable stocks to buy now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener, we shortlisted stocks that have grown their revenue and net income by at least 25% over the past 5 years. After sorting our initial list by market cap, we cross-checked the revenue and net income growth rates from Seeking Alpha. We also considered the trailing twelve-month net income and selected stocks that had a trailing twelve-month net income of more than $500 million. Lastly, we ranked the stocks in ascending order based on the number of hedge fund holders in Q3 2024, sourced from Insider Monkey’s database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Apollo Global Management, Inc. (NYSE:APO)
5 Year Revenue Growth: 77.12%
5 Year Net Income Growth: 64.20%
TTM Net Income: $5.56 Billion
Number of Hedge Fund Holders: 82
Apollo Global Management, Inc. (NYSE:APO) is a large investment firm that manages money for various clients, including pension funds and individual investors. The company focuses on three key areas including Asset Management, Retirement Services, and Principal Investing.
What investors like about the company is the fact that the investment firm has a healthy revenue mix coming from both asset management and annuity provider roles in the market. In a recent investors day event, the firm laid down its 5-year growth plan. The plan outlined its aim for average annual growth in Fee-Related Earnings (FRE) of 20% and 10% in supplemental revenue earnings, with both reaching $10 billion by 2029. They also projected Adjusted Net Income to more than double to $15 per share by 2029, alongside capital generation of $21 billion.
The third quarter results for fiscal 2024 of Apollo Global Management, Inc. (NYSE:APO) were in alignment with its 5-year plan. It achieved a record FRE, exceeding $1.5 billion year-to-date, driven by significant revenues from its credit management sector. Moreover, credit management fees grew by 20% year-over-year, with inflows surpassing $140 billion in the past year, indicating robust demand for their credit products.
Supplemental revenue earnings also reflected strong organic growth of $20 billion in the quarter, contributing to a total of $2.4 billion year-to-date. Looking ahead, Apollo Global Management, Inc. (NYSE:APO) is focused on maintaining cost discipline, with expenses rising by only 11% year-to-date despite significant growth in revenues. The company anticipates continued revenue growth trends into the fourth quarter, supported by a strong origination pipeline and an organic capital formation target of $120 million for 2024.
Baron FinTech Fund stated the following regarding Apollo Global Management, Inc. (NYSE:APO) in its Q2 2024 investor letter:
“Strength in Tech-Enabled Financials was broad based, led by gains from alternative asset manager Apollo Global Management, Inc. (NYSE:APO) and specialty insurer Arch Capital Group Ltd. Apollo continues to benefit from disruptive trends in financial services, most notably the shift of retirement assets into higher-yielding private credit given the company’s dual role as an asset manager and an annuity provider. “
Overall, APO ranks 3rd on our list of best extremely profitable stocks to buy now. While we acknowledge the potential of APO to grow, our conviction lies in the belief that 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 APO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.