Momentum Stocks: IVZ Struggles While KO and AMG Shine
The article discusses three stocks that are currently gaining momentum in the market.
Invesco (IVZ) is a global asset management firm that has been experiencing flat sales over the last five years, suggesting it needs to find new ways to grow during this cycle. Its high net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens.
Coca-Cola (KO), on the other hand, is a pioneer and behemoth in carbonated soft drinks that has differentiated product offerings difficult to replicate at scale. This results in a best-in-class gross margin of 61.7%. The company's disciplined cost controls and effective management have resulted in strong operating margins and free cash flow.
Affiliated Managers Group (AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence. Its performance over the past two years was turbocharged by share buybacks, enabling its earnings per share to grow faster than its revenue.