BDC (Business development companies) are organizations that invest in small and medium-sized companies to help them grow in the initial stages of their development. BDCs also help distressed businesses regain a sound financial footing.
We like Ares Capital in the sector.
This is a favorite BDC with us and across Wall Street. Ares Capital Corp. (NASDAQ:ARCC) is a leading specialty finance company that provides one-stop debt and equity financing solutions to US middle-market companies, venture capital backed businesses and power generation projects.
Ares Capital originates and invests in senior secured loans, mezzanine debt and, to a lesser extent, equity investments through its national direct origination platform. The company’s investment objective is to generate both current income and capital appreciation through debt and equity investments primarily in private companies.
Top analysts believe the strength of the company’s origination platform, sizable balance sheet and ample liquidity position it favorably in a very competitive investing environment.
Some believe that with the current tight spread environment Ares Capital has the scale and industry relationships to continue to make competitive, high-credit-quality investments.
Investors receive an 8.30% dividend. Our price target for the shares is 25, while the Wall Street consensus target is 21.27. Ares Capital stock closed at 19.76 Friday.
Have a prosperous week, Keep the Faith!