If you’re looking for exposure to a “very undervalued” stock, one which is among the world’s largest asset managers, we’ve got an idea for you.
Buy Franklin Resources (BEN).
Sure, the fund manager, with $738 billion in assets under management, has had a great run over the last six months. It’s up +14.6%. But skeptics on the stock are backward looking and overly fearful of negative fund flows, according to our Financials analyst Jonathan Casteleyn.
The flows are slowly, but surely, turning around.
“The top 100 Franklin funds are still in redemption, with an annualized negative growth rate of -8.3% but that has improved from the high teens,” Casteleyn says.
Meanwhile, the company has a “solid” net-asset value (NAV), with $12 per share in unrestricted cash and investments, and annual free cashflow of $2 billion for an 8% free cash-flow yield.
“Franklin stock is very undervalued in the intermediate-term, meaning over the next 12 to 24 months,” he says.