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Should You Hide Out in Cheap Insurance Stocks?

  • (1:00) - Is Insurance The Safe Investment?
  • (6:00) - Screen Criteria and Top Stock Picks
  • (15:15) - Episode Roundup: ACGL, CNA, ACL, PGR, TRV


Welcome to Episode #143 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

With the stock market showing volatility again, is there anywhere investors can hide?

Insurance has been around for hundreds of years. Lloyds of London was founded in 1688 in a coffee shop in London. Businesses and people have needed insurance in good times, and bad.

How Do You Find Insurance Stocks?

There are several types of insurance stocks including health, life insurance and brokerage.

But why not start with property and casualty?

That’s a Zacks industry under Insurance- property and casualty.

To find value stocks, Tracey added the forward P/E of 15 or less and a Zacks Rank of #1 (Strong Buy) or #2 (Buy), in order to get rising earnings estimates.

This screen produced 10 stocks.

But it was a narrow screen. Expanding it on Rank or on P/E will provide more names that investors may recognize.

5 Cheap Insurance Stocks

1.       Arch Capital Group ACGL is a specialty insurance and reinsurance company based in Bermuda. It’s cheap, with a forward P/E of 12.9. Earnings are expected to rise 19.5% in 2019 and another 8.3% in 2020. Shares have jumped 27% year-to-date.

2.       CNA Financial Corp CNA is one of the largest commercial insurers in the US. It’s forward P/E is just 11 and shareholders are also rewarded with a dividend yielding 3%. But shares have only gained 1.9% on the year.

3.       Allstate ALL fell outside the screen as it’s a Zacks Rank #3 (Hold). But it is expected to have double digit earnings growth in both 2019 and 2020. It’s also cheap, with a forward P/E of 10.5. Shares are beating the S&P 500 in 2019, up 16% versus the S&P at 11%.

4.       Progressive PGR is one of the hottest property insurers. Over the last 5 years, shares have soared 143% versus just 40% for the S&P 500. It’s also the most expensive of these five stocks, with a forward P/E of 15.3.

5.       The Travelers TRV also fell outside the screen due to its Zacks Rank. But earnings are expected to be up 24% in 2019. Shares are trading at just 13x. It also pays a dividend, yielding 2.1%. It’s been hot year-to-date, though, gaining 20.5% which easily outpaced the S&P 500 for the same time period.

Many of the insurance stocks have rallied in 2019 but the value is still there.

Is it time to consider insurance stocks for your portfolio?

Find out all about the property insurers on this week’s podcast.

Breakout Biotech Stocks with Triple-Digit Profit Potential

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The Allstate Corporation (ALL): Free Stock Analysis Report
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
The Progressive Corporation (PGR): Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report
CNA Financial Corporation (CNA): Free Stock Analysis Report
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