We recently compiled a list of the 10 Oversold Large Cap Stocks To Buy Now. In this article, we are going to take a look at where Franklin Resources, Inc. (NYSE:BEN) stands against the other oversold large cap stocks.
The Fed recently reduced the funds rate by 50 basis points, a decision seen as daring by some analysts, though it has been largely embraced by the market and many experts. The market seems to be on an upward trajectory since the day of rate cuts as the S&P gained over 4.3% on October 14 and closed at another all-time high.
While there are some concerns, experts are quite optimistic that they won’t be of much significance as we discussed in our article about best-performing long-term stocks in 2024. Here is an excerpt from the article:
“Dominic Chu of CNBC expressed concerns about potential market overconfidence, given the calmness amid geopolitical risks, the upcoming U.S. presidential election, and consumer spending challenges. [Gunjan] Banerji acknowledged these risks but emphasized that much of the market’s optimism is tied to the Fed’s actions, with people reassured by the larger-than-expected rate cut.
Finally, Banerji pointed out a broadening of the market rally beyond the tech sector and mentioned the strong performances in sectors like energy and materials, and record highs from companies like Caterpillar and McDonald’s, which indicates a healthier, more diverse market rally.”
The Path Forward for Equities and AI
Noah Blackstein, Senior Portfolio Manager at Dynamic Funds recently joined CNBC’s ‘Squawk Box’ and showed optimism around the equity markets. He suggested that current highs may continue. He expects the Fed will implement two more rate cuts this year, which would help sustain market momentum. Despite some geopolitical uncertainties and election concerns, the broader expectation in the market since July, along with favorable banking and credit indicators, supports his positive outlook.
Blackstein believes the labor market’s strength may be overstated and noted that revisions to employment data are likely due to a low participation rate in recent surveys. He also argued that real interest rates are historically high and tight, which further suggests the need for more cuts.
Regarding the economy, Blackstein expects further rate reductions to avoid potential market volatility, especially in light of recent hurricane impacts on employment and retail sales. He highlighted that while real interest rates may seem moderate when compared to the last 20 years, they are still elevated in historical terms.
As the Fed steers the economy away from a potential recession, Blackstein views the next phase as an opportunity for long-term growth, especially in areas like family housing and AI. He believes AI will drive a productivity revolution and integrate data strategies into several sectors, which will ultimately lead to cost savings and revenue growth for corporations.
Our Methodology
To list 10 oversold large-cap stocks, we used a Finviz screener to extract stocks that have fallen significantly on a YTD basis and have a forward P/E ratio between 5x to 15x. After getting a list of 20 stocks, we narrowed it to the most widely held by institutional investors. Finally, the stocks were ranked in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of an investor making a transaction, with a financial graph reflecting the market trend.
Franklin Resources, Inc. (NYSE:BEN)
Market Cap: $10.8 billion
FWD PE Ratio: 8.54
YTD Share Price Decline: ~30%
Number of Hedge Fund Holders: 27
Franklin Resources, Inc. (NYSE:BEN) is a global investment management firm serving clients in over 150 countries. It operates under the Franklin Templeton name through its various subsidiaries. The company specializes in equity, fixed income, alternatives, and multi-asset solutions. It employs more than 1,500 investment professionals worldwide and offers expertise in investment management, wealth management, and technology solutions.
The company recently reported preliminary assets under management (AUM) of $1.68 trillion as of September 30, 2024, unchanged from August 31, 2024. The company experienced $22.4 billion in long-term net outflows, with its subsidiary, Western Asset Management accounting for $27.9 billion of that figure, which was partially balanced by positive market performance. For the quarter ending September 30, 2024, market gains were offset by $31.3 billion in net outflows, including $37 billion from Western Asset Management.
On October 2, Franklin Resources (NYSE:BEN) announced a stronger partnership with Envestnet to offer tax-efficient, personalized investment strategies using Envestnet’s Canvas Custom Indexing platform. The expanded partnership will give Envestnet’s large network of advisors access to Canvas and help them create more customized and tax-friendly investment plans for their clients.
Canvas allows advisors to build diversified portfolios with more control and flexibility, going beyond traditional direct indexing. It is designed to meet the rising demand for personalized investment options, with Franklin Templeton bringing its experience in separately managed accounts (SMAs), managing $140 billion in SMA assets.
The partnership improves Franklin Resources’ (NYSE:BEN) position in the growing SMA market, where it already manages significant assets, while also providing greater scalability for its services. It strengthens the firm’s role as a leader in personalized wealth management.
Overall BEN ranks 9th on our list of the oversold large cap stocks to buy. While we acknowledge the potential of BEN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.