This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Build a Strong Portfolio With These 2 Stocks

Stocks in this article: BXOLPTTWX

BX provides alternative asset management and financial advisory services worldwide. It operates in five segments: Private Equity, Real Estate, Hedge Fund Solutions, Credit Businesses and Financial Advisory. What's exciting to me about BX is its real estate acumen. It knows when to get out and when to get in.

Back in 2005 through 2007, when real estate prices were going nuts on the upside, Blackstone sold $60 billion worth of real estate assets at the top of the market. Now it's doing its utmost to buy back in, focusing primarily on income-producing residential rental properties.

Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!

In a recent conference call, the founder of BX said, "Over our 27-year history, we've generated net annualized returns on realized investments of 23% in private equity and 28% in our global real estate business, which dwarfs performance of virtually any other investment class."

Recently, the company informed the investment world that it's purchased approximately $1.5 billion worth of houses in 2012 alone. It was classified as around 10,000 homes, which average about $1,000 a month in income. Do the math. That would mean around $10,000,000 per month in income on these properties alone.





BX's founder also clarified the ongoing strategy of buying at distressed pricing, fixing the houses up so they can be rented and someday selling when the real estate market becomes overvalued once again. BX has some peripheral ways of making money with real estate.

Their founder said, "We have our GSO Group, for example, doing financing structures for homebuilders. We have our Tactical Operations Group buying nonperforming loans... We're looking at investing in mortgage-related securities, which we think have very significant upside."

Blackstone reported that it has committed $17.6 billion to real estate since 2009. This would mean that BX is the biggest corporate investor in the world in the residential housing market. The chart below tells its five-year history when it comes to price-per-share and free cash flow. BX Chart BX data by YCharts

Over the next couple of years I anticipate the free cash flow increasing significantly along with their earnings-per-share (EPS). It's notable that the stock is trading at seven times forward earnings (one-year) and that the company is able to pay a 2.7% dividend. Increasing EPS and operating cash flow will be essential to sustaining and growing the dividend.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,195.42 +221.11 1.30%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,566.1380 +16.9120 0.37%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs