By Leslie N. Masonson, MBA
Apollo Global Management, Inc. (APO) stock price has doubled to $90.81 since its low of $45.62 on October 13, 2022, with an average trading volume. However, since hitting a recent low of $78.39 on August 18th, it has surged to $93.18, marking a 19% increase in just 22 trading days. Notably, APO has maintained a VectorVest ‘Buy’ signal since May 26, which has proven to be a wise move for VectorVest subscribers who purchased the stock on that signal date.
Apollo is a NYSE firm that was incorporated and headquartered in New York City in 1990. Currently, the company employs 2,450 individuals and has 566 million shares outstanding. For the quarter ending June 30, 2023, Apollo reported revenues totaling $1.02 billion. APO’s market capitalization stands at $51.5 billion, and it pays a dividend of $1.72 per share, yielding 1.84%.
Apollo Global Management Inc. is a private equity firm specializing in investments in credit, private equity, and real estate. Their services are primarily directed toward endowment and sovereign wealth funds, as well as institutional and high net worth individual investors. Their diverse portfolio includes corporate, traditional, and distressed buyouts, recapitalizations, corporate restructuring, acquisitions, and consolidations. Additionally, the firm manages client hedge funds.
While the average investor may not be familiar with this renowned private equity firm, it has attracted the attention of 918 institutional investors, comprising a significant following. Together, they own 55% of the outstanding shares, while insiders hold a substantial 43% stake. Management’s significant ownership stake reflects their strong belief in and support of the company’s potential. Notable institutional investors include Vanguard with a 13% position, Capital International Investors owning 5%, and Fundamental Investors Inc. with a 2.2% position.
CEO Marc Rowan was featured in a September 22, 2023, Fortune article on finance.yahoo.com where he outlined his plans to transform the company into a $1 trillion Wall Street heavyweight. Although the firm was previously known for its high-profile equity deals, Rowan is pursuing a more measured approach, with an eye on mergers. Apollo has reported $2 billion in adjusted earnings in the first six months of 2023. Since Rowan assumed leadership of the company in March 2021, the stock price has appreciated by an impressive 89%. Apollo has outperformed many of its rivals, including KKR, Blackstone, and Brookfield, in terms of market capitalization growth.
Zacks rates the stock as #2 in its September 19 Analyst Blog of featured stocks, based on its anticipated revenue and earnings growth of approximately 25% each for 2023. The Wall Street Journal reports that wealthy individuals are a significant source of capital for private equity firms, and APO aims to raise $15 billion by the end of 2026.
Furthermore, funds from wealthy individuals have increasingly supported private credit and other ‘alternative’ investments compared to traditional stocks and bonds. Apollo Global Management reported that it raised $6 billion through retail channels last year and is on track to raise $15 billion annually by 2026.
APO is classified in VectorVest’s Financial (Management) grouping and is ranked as #1 out of 128 companies. Remarkably, it also holds the #1 rank in the broader Financial sector, out of 365 stocks. This is particularly noteworthy considering that the group itself is ranked #78 in Relative Timing (RT) out of 222 tracked industries, which is an average showing. While it’s beneficial for a stock to belong to a highly-ranked group since similar stocks often move together, this isn’t a critical factor when the company exhibits such positive characteristics, as detailed below.
APO Exhibits Four “Excellent” Metrics, Is Under Valued by Nearly 50% and Has Been a Top Market Performer Since October 2022 and May 2023
The VectorVest software issues buy, sell, or hold recommendations on all 9,158 stocks and ETFs tracked. This proprietary stock rating system breaks down the data into three simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each is measured on its own scale of 0.00-2.00, with 1.00 being the average for quick and easy interpretation, and 2.00 being the best.
As for APO, its current metrics are as follows:
- Excellent Upside Potential: The Relative Value (RV) rating focuses on the stock’s long-term, three-year price appreciation potential. APO currently holds an RV rating of 1.68, which is exceptionally high. The current stock price is $90.81, and VectorVest places its value at $138.35, indicating that the stock is very undervalued with an excellent upside potential of 49%.
- Good Safety: The Relative Safety (RS) rating is based on the company’s business longevity, financial predictability/consistency, debt-to-equity ratio, and additional risk parameters, including price volatility. Its RS rating of 1.21 is above average, indicating below-average risk, which makes it a reasonable candidate for conservative investors.
- Very Good Timing: The Relative Timing (RT) rating focuses on the price trend over the short, medium, and long term. The components include price direction, dynamics, and price magnitude of price changes over daily, weekly, quarterly, and yearly comparisons. APO boasts an exceptionally high RT rating of 1.30, well above the database average of 0.81. This indicates that the stock has consistently outperformed across various timeframes.
Recall that a perfect RT score is 2.00, and that only five other stocks in the 9,158 universe have a higher score than APO which means that this stock is a “needle” in the haystack, as far as timing is concerned.
- Excellent Comfort Index: This index measures the consistency of a stock’s long-term resistance to severe and lengthy corrections. This index compares the individual stock to the fluctuation of the VectorVest Composite price. APO’s rating of 1.41 is well above average. This high reading makes it suitable for conservative investors.
- Excellent Growth Rate (GRT): APO’s current sales growth rate over the past 12 months has been 493%, and its forward-looking earnings growth rate is 36% (measured over a forecasted three-year period), which are both very solid fundamentals. These two factors, among many others, are captured by the VectorVest software. Therefore, you can quickly get a picture of the company’s fundamental measurements with a few mouse clicks.
- Excellent VST Score: The VST Master Indicator ranks all stocks from high to low with those stocks with the highest VST scores at the top of the list. LWAY’s VST is 1.41, which is well above average. Moreover, this stock is ranked #24 in VST out of 9,158 in the VectorVest database which means it is in the top 3/10th of 1% of all stocks, quite an achievement. Using VST enables subscribers to identify stocks that are performing much better or worse than the average, and APO is clearly in the former category.
In conclusion, APO’s exceptional metrics, including its rapid rise in the Stock Viewer rankings since May, have the potential to propel the stock price much higher. Looking at the chart below, it shows the explosion in price since early May. However, APO has a high Beta at 1.67, meaning that the price fluctuates 67% more than its index benchmark. So, it is best suited for aggressive investors with a high-risk tolerance threshold.
The earnings trend is on an upward trajectory, and the average daily trading volume of 2.2 million provides a favorable low bid-to-ask price spread for traders.
This highly-rated stock should be placed on investors' watchlists for a possible continuation of its price momentum going forward. But be cautious right now, as it took a quick hit of 10.7%, after the price previously ran up a quick 6% on the recent earnings release but has come back strong.
If you decide to purchase the stock, be sure to place a stop-loss order at a comfortable level below your purchase price. Currently, the stock price sits 10% above its 40-DMA, which means that it is not very extended, a positive sign.
Although the MACD is still positive, it should be monitored, as another down day could result in a negative crossover from Friday's close. Now is not a good time to jump in due to VectorVest’s Daily Color Guard mildly bearish market call. Wait for the bullish call for a higher probability of success.
If you're not a VectorVest subscriber, consider the $9.95 30-day trial to confirm that both the VectorVest Daily Color Guard and APO stock are giving 'BUY' signals before taking action.
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