Tuesday's IBD 50 Stocks To Watch pick, Ares Management, is approaching a new buy point during the ongoing stock market rally attempt. The stock climbed about 0.5% midday Tuesday.
Stocks To Buy And Watch: Ares Management
Los Angeles-based Ares Management offers investment management services to institutional and high net worth investors. The company offers investment strategies through three segments: Credit Group, Private Equity Group and Real Estate Group.
In the most recent quarter, reported on July 29, Ares earned 69 cents per share on revenue of $1.29 billion. Year over year, earnings and sales jumped 97% and 115%, respectively. For the current quarter — to be reported early Oct. 27 — analysts expect the company to earn 64 cents per share on sales of $532.7 million, according to IBD data.
"We are in a period that provides a strong market backdrop for realizations. And our model is diversified, where we have the opportunity to realize performance income from realizations to the full or partial exit of positions and strategies like private equity and real estate. And our credit business enables us to earn performance income more consistently over the typical life cycle of those funds," said CFO Michael McFerran on the Q2 earnings conference call.
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Investment Leader's IBD Stock Ratings
Ares Management ranks No. 22 in the IBD 50. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.)
The stock shows a modest 78 Earnings Per Share Rating, of a best-possible 99, but a strong A SMR Rating, according to IBD Stock Checkup. The EPS Rating tracks a company's short- and long-term earnings performance. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
IBD Stock Checkup also shows that ARES stock boasts a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths.
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ARES Stock Tops New Buy Point
ARES stock is back above its key 50-day moving average following last week's 4.4% climb. Shares are tracing a flat base with an 81.26 buy point, according to IBD MarketSmith chart analysis. The latest buy point comes on the heels of a successful breakout above an earlier flat base's 59.27 buy point. After a June 8 breakout move, the stock advanced as much as 36.9% on Sept. 9 before the latest base formation.
The stock's relative strength line is just off new highs, a bullish signal during the current stock market correction, per IBD's The Big Picture. Monday's The Big Picture advised investors to favor cash and wait for a buy signal from the major stock indexes in the form of a follow-through day.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
