Top Wall Street analysts believe the strength of Ares Capital’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, the company has the scale and industry relationships to continue to make competitive, high-credit-quality investments.
Investors receive an 8.62% dividend. The Jefferies price target for Ares Capital stock is $24, and the consensus target is $21.54. The stock closed on Wednesday at $20.44.
Barings BDC
This off-theadar BDC offers solid total return potential. Barings BDC Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company. It seeks to invest primarily in senior secured loans to private U.S. middle-market companies that operate across a wide range of industries.
The company specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing and recapitalizations in lower middle market, mature and later-stage companies. Barings BDC’s investment activities are managed by its investment adviser, Barings, a leading global asset manager based in Charlotte, North Carolina, with over $335 billion of assets under management firmwide.
Shareholders receive a 9.51% dividend. Jefferies has a $12.50 price target, while the consensus target is $11.46 and Wednesday’s close was at $10.20 a share.
Capital Southwest
Based in Dallas, which has been a hub for activity, this is another top BDC that offers long-term growth potential. Capital Southwest Corp. (NASDAQ: CSWC) specializes in credit and private equity and venture capital investments in middle-market companies, mezzanine, later stage, mature, late venture, emerging growth, buyouts, recapitalizations and growth capital investments.
It does not invest in startups, publicly traded companies, real estate developments, project finance opportunities, oil and gas exploration businesses, troubled companies, turnarounds and companies in which significant senior management is departing.
Capital Southwest seeks to invest in energy services and products, industrial technologies, and specialty chemicals and products. Within energy services and products, the firm seeks to invest in each segment of the industry, including upstream, midstream and downstream, excluding exploration and production with a focus on differentiated products and services, equipment and tool rental, consumable products, and drilling and completion chemicals. Within industrial technologies, it seeks to invest in automation and process controls, handling and packaging equipment, industrial filtration and fluid handling, measurement, monitoring and testing, professional tools, and sensors and instrumentation.
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