Valued at a market cap of $128.5 billion, Brookfield Asset Administration (TSX:BAM) is among the many largest firms in Canada. BAM is a non-public fairness agency that makes a speciality of acquisition and progress capital investments.
It invests in capital-intensive sectors comparable to clear power and infrastructure. Throughout the infrastructure sector, it invests throughout varied verticals, together with transport, information, utilities, and midstream sectors.
The TSX inventory has returned greater than 30% within the final 12 months and has doubled in market worth since late 2022. Let’s see if BAM inventory stays an excellent purchase at the moment.
The bull case of investing in BAM inventory
Within the second quarter (Q2) of 2025, Brookfield Asset Administration delivered spectacular Q2 outcomes. The choice asset supervisor reported fee-related earnings of US$676 million, a rise of 16% yr over yr, whereas distributable earnings rose 12% to US$613 million. Price-bearing capital stood at US$563 billion, a ten% improve yr over yr, pushed by fundraising and deployment exercise.
A strategic concentrate on digitalization, decarbonization, and deglobalization continues to pay dividends. These megatrends are anticipated to create capital calls for throughout infrastructure, renewable energy, and important providers.
Brookfield’s investments in synthetic intelligence infrastructure characterize a compelling alternative, with administration estimating a US$7 trillion marketplace for synthetic intelligence (AI)-related capital expenditures.
Latest strategic partnerships underscore the worth proposition of Brookfield. The US$10 billion framework settlement with Sweden’s authorities for AI and cloud infrastructure growth, mixed with renewable power offers value over US$3 billion with Google, demonstrates a capability to ship built-in options at scale.
These partnerships leverage Brookfield’s current capabilities throughout renewable energy, actual property, and infrastructure to create complete choices that few opponents can match.
Funding exercise accelerated in Q2, and the corporate has already deployed US$85 billion yr up to now throughout main infrastructure transactions.
This deployment tempo signifies a strong deal surroundings and Brookfield’s capability to maneuver decisively on giant, complicated transactions. Concurrently, the corporate generated worth by way of US$55 billion in asset gross sales and raised US$33 billion in fairness proceeds, which highlights the standard of its portfolio administration.
Brookfield raised US$22 billion throughout the quarter, bringing 12-month fundraising to US$97 billion. Notably, three-quarters of quarterly fundraising originated from complementary methods somewhat than flagship funds, which highlights the platform’s diversification. The corporate’s non-public wealth channel is on monitor to boost over US$30 billion this yr, whereas the latest acquisition of Simply Group within the U.Ok. provides US$36 billion in potential belongings beneath administration.
Credit score methods proceed to scale quickly, with US$250 billion in fee-bearing capital making Brookfield one of many largest non-public credit score platforms globally.
A concentrate on asset-backed finance, actual asset lending, and opportunistic credit score, areas the place Brookfield maintains aggressive benefits, helps the platform keep away from commoditized markets whereas producing enticing risk-adjusted returns.
Administration’s five-year plan goals to double the enterprise measurement, attaining a 16-17% compound annual progress in fee-bearing capital and fee-related earnings.
The mix of scaling flagship funds, increasing complementary methods, and penetrating particular person markets supplies a number of progress vectors.
Is BAM inventory undervalued?
Analysts monitoring the TSX inventory forecast income to rise from US$4 billion in 2024 to US$6.66 billion in 2027. In comparison with this, adjusted earnings are anticipated to extend from US$1.45 to US$2.21 throughout this era.
BAM inventory is forecast to pay shareholders an annual dividend of US$1.76 per share in 2025, which signifies a yield of three.3%. These payouts are anticipated to extend to US$2.20. per share in 2027.
BAM inventory trades at 33.8 occasions ahead earnings, above its common a number of of 28 occasions. If the TSX inventory trades at 30 occasions earnings, it needs to be priced at US$66, indicating an upside potential of 14% from present ranges. If we regulate for dividend reinvestments, cumulative returns may very well be nearer to 19% over the following 18 months.
