Private-Equity-Linked Stocks: Unlocking Undervalued Resilience in a Volatile Market

Private equity has long been a bastion of resilience in turbulent markets, and 2025 is no exception. According to a 25-year Institutional Investor analysis a 25-year Institutional Investor analysis, private equity has outperformed public markets by an average annualized excess return of 8% during major crises, including the Dotcom Crash, the Global Financial Crisis, and the pandemic-driven market turmoil. This structural advantage stems from its ability to target less cyclical sectors like healthcare and technology, as well as the flexibility of general partners (GPs) to call capital at lower valuations during downturns, a point the analysis emphasizes. As global markets grapple with inflation, geopolitical tensions, and trade policy uncertainty, private-equity-linked stocks are emerging as compelling opportunities for investors seeking undervalued resilience.

The 2025 Landscape: Adaptation and Strategic Shifts

Q2 2025 saw global private equity investment reach $363.7 billion across 3,769 transactions, with the U.S. dominating activity, according to KPMG's Q2'25 Pulse KPMG's Q2'25 Pulse. Despite a decline in deal volume compared to Q1, the sector demonstrated adaptability. For instance, Blackstone Infrastructure Partners' $11.5 billion buyout of TXNM Energy and Thoma Bravo's $10.5 billion acquisition of Boeing's Digital Aviation Solutions underscored a shift toward domestic and regional markets to mitigate trade risks. EY's Private Equity Pulse report notes that 40% of firms are now willing to accept 5%-10% discounts on long-held assets to achieve liquidity, reflecting a pragmatic approach to valuations in a high-interest-rate environment EY's Private Equity Pulse.

This strategic recalibration is further supported by $1.2 trillion in dry powder-buyout capital awaiting deployment-which suggests a potential rebound in activity if macroeconomic clarity emerges, the EY report adds. Meanwhile, investors remain cautious about second-order effects of tariffs, such as GDP growth and interest rate volatility, yet 66% expect deployment to rise in the next six months, the Institutional Investor analysis found.

Undervalued Resilience: Five Strategic Buys

For investors eyeing private-equity-linked stocks, the focus should be on companies with low P/E ratios, robust dividend yields, and sector-specific resilience. Here are five standout candidates:

1. Ford Motor Co. (P/E 15, yield 5.53%)
   Ford's recent 35% earnings decline masks its long-term potential in the EV and autonomous vehicle sectors. With a P/E ratio below the S&P 500 average and a dividend yield near 5.5%, it offers a compelling entry point for investors betting on industrial innovation.

2. TC Energy (P/E 18, yield 4.65%)
   Despite a 13% earnings dip in 2025, TC Energy's three-year growth of 29% and its critical role in North American energy infrastructure position it as a defensive play. Its 4.65% yield also provides income stability amid inflationary pressures.

3. Northwest Natural Holding (P/E 17.71, yield 4.38%)
   This utility stock has seen 25% earnings growth in 2025, driven by its focus on clean energy and regulated utilities. Its 4.38% yield and low volatility make it a cornerstone for risk-averse portfolios.

4. Spire Inc. (P/E 17, yield 3.87%)
   Spire's 9% earnings growth and exposure to healthcare infrastructure align with private equity's sectoral preferences. Its 3.87% yield and recent price resilience suggest undervaluation in a high-demand industry.

5. Dillards (P/E 17, yield 3.78%)
   While its earnings have fallen 16.31% this year, Dillards' recent price high and 3.78% yield indicate a recovery narrative. Retail's repositioning in the post-pandemic era could unlock value for patient investors.

(These stock selections and metrics are drawn from the Forbes piece referenced above.)

Strategic Considerations for 2025

The current environment demands a nuanced approach. Private equity's focus on regionalization and resilient sectors like AI infrastructure and energy aligns with macroeconomic tailwinds, as KPMG's Q2'25 Pulse observed. However, investors must balance short-term earnings volatility with long-term sectoral trends. For example, while Ford's earnings have declined, its strategic pivot to EVs mirrors private equity's preference for transformative growth. Similarly, TC Energy's role in energy transition positions it to benefit from policy-driven demand.

McKinsey's 2025 Global Private Markets Report highlights uneven recovery dynamics, with North America and Europe outpacing Asia - a regional divergence that suggests investors should prioritize geographies with stable regulatory frameworks and strong capital flows (per EY's Pulse discussion).

Conclusion: A Window of Opportunity

Private-equity-linked stocks offer a unique intersection of undervaluation and resilience, particularly in sectors poised for long-term growth. As the industry navigates trade uncertainties and interest rate normalization, these stocks provide a hedge against macroeconomic volatility while offering income through dividends. With $1.2 trillion in dry powder and sponsors increasingly flexible on valuations, the current market setup favors strategic buyers who can identify mispriced assets with durable cash flows.

For investors, the key lies in aligning with private equity's playbook: focus on less cyclical sectors, prioritize liquidity, and leverage the structural advantages of private capital. In a world of persistent uncertainty, these principles remain timeless.