If you're looking for one stock to create a portfolio that's competitive with the rest of the world, you need something that's heavily entrenched in what it does, and that does it better than everyone else. Furthermore, it needs a history of keeping up with the S&P 500. Otherwise, what's the point of even owning an individual stock versus an exchange-traded fund (ETF) that tracks the market?
Enter BlackRock (BLK 2.03%). This asset manager has been in the game for a long time, and has outpaced the broader market often. You're probably familiar with its host of "iShares" ETFs. The company offers investors a whole host of options related to investments through these types of funds, and it has benefited greatly.
Total revenue growth was admittedly a bit weak in the past few fiscal years, but I think it would be shortsighted to look at it from such a short-term viewpoint. BlackRock has turned itself into a behemoth of finance, and stands to benefit from that scale. A strong stock portfolio should contain a couple dozen or more companies, but if, for some reason, I could only own one stock, it would be BlackRock.
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In its most recent quarter, BlackRock saw an 18% increase in assets under management (AUM) compared to a year ago, bringing total AUM to over $12.5 trillion. Revenue increased 13% year over year to $5.42 billion, and net income increased 7% to $1.59 billion. The revenue was a miss on the top line compared to estimates, but I still like BlackRock's position as a whole. Over time, the company continues to grow.
Over the last five years, BlackRock shares have largely mirrored the overall performance of the S&P 500, coupled with a dividend near 2%. Over the last 12 months, the finance stock has outpaced the S&P 500 by 10 percentage points. The company is simply in everything finance: buying and selling equities, providing services for institutional investors, fixed income investing, real estate, and, of course, its iShares ETFs.
CEO Laurence Fink noted that the company's iShares ETFs had record first-half inflows, and I don't see many reasons to think that's going to stop. ETFs are such a simple way for investors to gain access to investing that I suspect they'll continue becoming an ever larger piece of BlackRock's business.
Looking ahead, analysts are calling for fairly steady increases in earnings over the coming years, with estimates for 2025 of $47.58. That would give the stock a forward price-to-earnings (P/E) ratio of 23.5. While this is a little more pricey for a finance stock, I think it's warranted given that this is the largest asset manager in the world, and it stays in line with its current P/E.
The key with BlackRock is to think long-term. Since 1999, the stock has gained 7,885%. While it might not continue that level of momentum, it seems primed to keep growing, given its leading position in its industry. BlackRock is the second-largest shareholder of all of the "Magnificient Seven" stocks: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. These have been some of the best-performing stocks over the past few years, and BlackRock certainly stands to benefit from its positions within these equities.
BlackRock is a stock that offers access to virtually every area of finance, while reducing risk for investors, as its activities are so broad. If there's one stock to own for a portfolio, it makes sense to invest in a company that has a strong track record, and positions across a diverse number of assets. BlackRock fits that bill.
