Top pick for a standalone stock investment: This selection.
Brookfield Corporation (BN), a global investment firm, has established itself as a compelling single-stock investment opportunity. With an impressive track record of strong total returns and a diversified business model, it offers a high growth trajectory that sets it apart from traditional conglomerates like Berkshire Hathaway.
Over the past 30 years, Brookfield has achieved an impressive 18% annualized return. In the last five years alone, it has delivered an average annual total return of approximately 19.2%, significantly outperforming the S&P 500's 13.8% return.
One of the key factors contributing to Brookfield's investment potential is its rapid expansion of alternative asset management. As a leading alternative investment manager with over $1 trillion in assets under management (AUM), it plans to double this in the next five years. This growth generates fee-based income and carried interest.
Brookfield's wealth solutions business has also seen significant growth. Insurance assets under management have grown sharply from $2 billion to over $110 billion in just four years, thanks to acquisitions like American National and AEL. This segment now generates over $2 billion in annual earnings, which are partly reinvested to compound shareholder value.
In addition to its wealth solutions business, Brookfield operates real assets such as real estate, infrastructure, and renewable power. These operations generate predictable cash flow for reinvestment. Unlike Berkshire Hathaway, Brookfield often channels excess cash into its own alternative investment funds, adding a layer of growth potential from fund performance.
Brookfield expects annual cash flow growth above 20% per share over the next five years, with a projected $47 billion in cumulative free cash flow. This supports rising dividends, share buybacks, and expansion investments.
Despite its growth, Brookfield trades at a price below its estimated intrinsic value. The current share price is under $70, while intrinsic value estimates are around $84 per share, suggesting undervaluation.
In comparison, Berkshire Hathaway, known for its diversified insurance businesses and significant equity holdings, offers a more traditional model. However, Brookfield's alternative asset-focused model with a high growth trajectory, particularly its growing insurance and perpetual asset management platforms combined with strong operational cash flow, makes it a compelling investment option.
In summary, Brookfield's track record of strong total returns, diversified and growing asset base, strategic acquisitions, and robust cash flow growth forecast make it a compelling single-stock investment with potential to outpace traditional conglomerates like Berkshire Hathaway over the next several years.
As the CEO of Brookfield Corporation, Bruce Flatt, looks towards a long-term target of delivering total annual returns of 15% or more, investors may find this terrific company with a record of delivering above-average total returns an attractive addition to their portfolios. However, it's important to note that all investments carry risk, and investors should conduct their own research before making investment decisions.
Currently, the stock of Brookfield Corporation is down 0.85%. Despite this, its potential for growth and strong performance make it a stock worth considering for long-term investors.
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