These three insurance stocks exemplify what it means when old-school investment experts talk about value or “cheapness.” Those who have read and studied the principles stated by Benjamin Graham in his classic works on the subject, "The Intelligent Investor" and "Security Analysis," might be looking for opportunities right now.
At a time when growth is venerated to an extreme and hot tech and social media stocks find almost unending praise in the financial media, the pursuit of value makes you some kind of contrarian. For those who favor going against what is popular and who have a long-term frame of mind, these ideas might be of interest.
Loews
Loews Corp. (L, Financial) is an insurance company with headquarters in New York City. The company also does business in other sectors, such as energy, hospitality and packaging, but its CNA division, with a 120-year history in the property and casualty insurance field, makes up the greater part of the organization.
The New York Stock Exchange-listed stock is big with a market capitalization of $14.34 billion. The stock now trades at a 2% discount from its book value with a price-earnings ratio of 12. Earnings over the past five years show growth of 3.81%. Loews pays a 0.39% dividend.
The daily price chart for Loews looks like this:
After peaking in mid-September, the stock continues to trade above both its 50-day and 200-day moving averages.
MGIC Investment
MGIC Investment Corp. (MTG, Financial) is the parent company of the Mortgage Guarantee Insurance Corp. and “provides products and services that protect mortgage investors from credit losses,” according to the group’s website. Based in Milwaukee, market capitalization comes to $4.79 billion
The company recently reported second-quarter earnings of 66 cents per share versus first-quarter earnings of 80 cents per share. Now trading with a price-earnings ratio of 6.43, shares are available for purchase at a 1% discount from book value. MGIC Investment is paying a dividend of 2.47%.
The daily price chart is here:
After peaking in August, the stock is now downtrending and has closed below its 50-day moving average.
Radian Group
Radian Group Inc. (RDN, Financial) is a mortgage insurance company with corporate headquarters in Wayne, Pennsylvania and other operations centers, including Cherry Hill, New Jersey, Denver, Colorado and Salt Lake City, Utah. The company has a market capitalization of $3.99 billion.
Keefe Bruyette in June downgraded the stock from outperform to market perform with a price target of $27.50 and Bank of America Securities in May had downgraded it from buy to underperform. The past five-year earnings growth is 51%, but this year’s earnings are off by 28%.
The stock can be purchased for 96% of its book value. It trades with a price-earnings ratio of 6.18. Radian Group offers investors a 3.55% dividend.
Here is the daily price chart for the stock:
Radian Group has closed below its 50-day moving average, which is now beginning to downtrend.
Disclaimer: This is not investment advice. It is for educational purposes only. Stats courtesy of FinViz.com.
