Alternative asset manager Brookfield Asset Management Inc. (TSE:BAM.A) (NYSE:BAM) is known for investing in capital projects, with the most recent being a $30 billion deal with Intel Corp. (NASDAQ:INTC). Even though the stock has lost 16.3% so far this year, the company’s strategy of making the right investment decisions to ensure its long-term growth increases the appeal of BAM.A stock.
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What Does Brookfield Asset Management Do?
Headquartered in Canada, Brookfield Asset Management has assets under management worth $750 billion spread across, credit, equity, renewable power, real estate, and infrastructure segments. It also offers alternative investment products to pension funds, sovereign wealth funds, insurance companies, and financial institutions across the world.
The Deal with Intel
Last week, BAM.A’s subsidiary Brookfield Infrastructure Partners (BIP) signed an agreement with Intel to invest up to $15 billion to build two semiconductor chip production factories in Chandler, Arizona. In return, BIP will get a 49% stake in the project. Additionally, Intel will put an equal amount for the remaining 51% stake.
The deal expands an agreement that the two companies signed in February. For Brookfield, this investment is similar to private equity investments in infrastructure like fiber and data centers and is expected to close by the end of this year.
Q2 Results at a Glance
On August 11, Brookfield Asset Management released its financial results for the second quarter of 2022. Revenues increased to $23.26 billion from $18.3 billion in the year-ago quarter. However, net income declined to $1.48 billion versus $2.43 billion in the previous year, primarily due to a rise in interest expenses, higher depreciation and amortization, and a fall in the value of its assets.
Commenting on the results, Nick Goodman, the Chief Financial Officer of Brookfield, said “We delivered strong results in the second quarter, supported by our resilient global portfolio of inflation-protected real assets and record levels of fundraising. We have a record of $111 billion of cash and capital available for investment after generating $1.5 billion of net income and $1.2 billion of cash flow. We had asset sales of $21 billion and deployed $20 billion into new investments.”
Is BAM.A Stock a Buy?
On the back of the company’s robust results, two analysts reiterated a Buy rating on the stock. This translates to a consensus rating of Strong Buy on TipRanks. BAM.A’s average price target of C$79.36 implies upside potential of 23.8%.
Just like analysts, bloggers and insiders are positive about BAM.A stock. TipRanks data shows that financial bloggers are 92% Bullish on the stock, compared to the sector average of 68%, and corporate insiders have bought $1.1 million worth of BAM.A stock in the last three months.
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