FS KKR
This very well-known name on Wall Street offers a solid entry point at current levels. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.
The company also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seeks to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.
Additionally, on an opportunistic basis, the fund may invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations or companies with speculative business plans. It seeks to invest in small and middle-market U.S. companies with annual revenue between $10 million to $2.5 billion. It seeks to exit from securities by selling them in a privately negotiated over-the-counter market.
The company posted stellar second-quarter results, as earnings and revenues surpassed Wall Street estimates. It also announced it will continue a huge stock buyback.
Shareholders receive an 11.13% dividend. The $25 Jefferies price target compares with a consensus target of $22.56 and Friday’s close at $21.92 a share.
Genco Shipping & Trading
This is another top stock in the group that broke out late last month and looks poised to trade higher. Genco Shipping & Trading Ltd. (NYSE: GNK) engages in the ocean transportation of dry bulk cargoes worldwide. The company owns and operates dry bulk carrier vessels to transport iron ore, coal, grains, steel products and other dry bulk cargoes. It charters its vessels primarily to trading houses, including commodities traders, producers and government-owned entities.
Genco provides a full-service logistics solution to customers utilizing an in-house commercial operating platform, as it transports key cargoes such as iron ore, grain, steel products, bauxite, cement, nickel ore among other commodities along worldwide shipping routes.
The wholly owned, high-quality, modern fleet of dry cargo vessels consists of the larger Capesize (major bulk) and the medium-sized Ultramax and Supramax vessels (minor bulk), enabling it to carry a wide range of cargoes. It makes capital expenditures from time to time in connection with vessel acquisitions. As of April 12, 2022, the company’s fleet consisted of 17 Capesize, 15 Ultramax and 12 Supramax vessels with an aggregate capacity of approximately 4,635,000 deadweight tonnage and an average age of 10.1 years.
Genco Shipping & Trading stock comes with a 12.83% dividend. Jefferies has set its target price at $25, but the consensus target is $27.55. The shares ended Friday trading at $15.59 apiece.
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