- Brookfield Business Partners has +30 years of proven track record in investing and managing businesses on a global basis.
- It aims for returns of 15-20%.
- Buying the stock on big corrections can lead to even higher returns for you.
- The risks lie in the strong reliance on management competency and the limited partnership having volatile earnings/cash flows from buying and selling businesses. This makes it very difficult to value the stock.
What Does BBU Do?
Brookfield Business Partners LP (TSX:BBU.UN)(NYSE:BBU) acquires high-quality businesses that are either market leaders or are businesses that it can improve on by applying its global investing and operational expertise.
Ultimately, BBU believes that the businesses that it acquires will generate strong cash flow — if not now, then in the future (after it improves the operations). When a business has maximized its value, BBU would sell it and redeploy the proceeds in better opportunities for higher returns.
BBU is trading at a cheap P/E and P/OCF of 10.3 and 1.6, respectively. However, it’s difficult to value the company because its earnings/cash flow generation can be volatile due to its acquiring and selling businesses.
In addition, it’d consider buying businesses that are not profitable — believing that it can use its operational expertise to improve the operations and generate strong profitability and cash flow in the future.
So, there’s a heavy reliance on management competence. If BBU buys a business that isn’t as good as planned or it takes too long to improve a business, there can be a big hit on the stock.
Unfortunately , I have maxed the word limit for this excerpt, but you can access the full Seeking Alpha article here: Brookfield Business Partners: This Growth Stock Is Priced At A Tremendous Discount
Looking for price appreciation? Here are more proven growth stocks to buy on dips.
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Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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