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Zacks Investment Ideas feature highlights KBWP, Cincinnati Financial, and American Financial Group
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For Immediate Release
Chicago, IL – March 15, 2022 – Today, Zacks Investment Ideas feature highlights Invesco KBW Property and Casualty Insurance ETF (KBWP - Free Report) , Cincinnati Financial Corp. (CINF - Free Report) , and American Financial Group, Inc. (AFG - Free Report)
The Best Offense Is a Solid Defense During Market Corrections
Last year was a great year to put the pedal to the metal and let stocks do their thing. The passive fund investor benefitted as volatility was essentially non-existent and drawdowns in the major indices were very limited. It was also a good time to get aggressive with certain individual stocks that were outperforming the market.
The stock market is a dynamic environment – one in which investment themes can change abruptly. When stocks bottomed after the pandemic-induced market plunge in March of 2020, it paid to get offensive and remain that way through the end of last year. This year represents a new kind of challenge with greater volatility and drawdowns. The market has flipped the script.
During market corrections, shifting portfolio allocations to become more defensive is often the best course of action. Defensive industries tend to remain stable through different phases of the economic cycle. Incorporating this less aggressive positioning can help defend against market plunges that likely affect other portfolio holdings.
While certainly not guaranteed, defensive stocks tend to outperform the market when economic growth slows. Insurance is an example of a group that has historically been viewed as defensive. The companies contained within this group provide a service that is consistently purchased and does not fluctuate dramatically. One way we can target this group is through ETFs.
The Invesco KBW Property and Casualty Insurance ETF has been steadily trending upward throughout the past year. KBWP is less than 1% below its 52-week closing high and is outperforming the market this year with a +3.38% return. KBWP invests in companies that are primarily engaged in domestic property and casualty insurance activities.
The Invesco KBW Property and Casualty Insurance ETF is bucking the negative trend of today's action and is currently up +2.39%. The two companies we will discuss below are two of the top fifteen components within KBWP and account for 7.7% of the total holdings.
These companies are part of the Zacks Insurance – Property and Casualty industry group, which currently ranks in the top 26% out of approximately 250 industry groups. This industry group is displaying some favorable characteristics as illustrated below:
Cincinnati Financial Corp.
Cincinnati Financial provides property casualty insurance products in the United States. CINF operates through five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The company's Life Insurance segment provides term, universal and whole life insurance products as well as markets life and disability income insurance and annuities. Cincinnati Financial was founded in 1950 and is headquartered in Fairfield, OH.
A Zacks Rank #1 (Strong Buy) stock, CINF's net written premiums have witnessed a 5.7% CAGR from 2014-2021. The insurance provider has beaten earnings estimates in each of the past six quarters. CINF most recently reported Q4 EPS back in February of $1.97, handily beating the $1.50 Zacks Consensus Estimate. Over the past four quarters, CINF has posted a 38.48% average earnings surprise.
The stock has responded quite well, advancing nearly 22% in the past year and over 12% this year alone. Analysts covering CINF have upped their current-quarter earnings estimates by 5.71% in the past 30 days. The Q1 EPS Zacks Consensus Estimate is now $1.48, reflecting growth of 8.03% relative to the same quarter last year.
American Financial Group, Inc.
American Financial Group is an insurance holding company that provides specialty property and casualty insurance products domestically. The company offers diverse property and transportation insurance such as agriculture and ocean marine products. AFG focuses on specialized commercial products for businesses as well as the sale of traditional fixed and fixed-indexed annuities. American Financial Group was founded in 1872 and is based in Cincinnati, OH.
Net written premiums for AFG are expected to be 8-12% higher than the $5.6 billion reported last year. AFG has surpassed earnings expectations in each of the past six quarters. The insurance provider most recently reported Q4 EPS of $4.12, a 38.26% surprise over the $2.98 Zacks Consensus Estimate. A Zacks #2 (Buy) stock, AFG has delivered a trailing four-quarter average earnings surprise of 39.58%, helping push the stock 46% higher in the past year.
Analysts covering AFG have increased their current-quarter estimates by 2.51% in the past 30 days. The Q1 EPS Zacks Consensus Estimate now stands at $2.45, translating to growth of 2.94% versus the same quarter a year ago.
Keep an eye on these two insurance giants.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022?
Last year's 2021Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don't miss your chance to get in on these long-term buys
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights KBWP, Cincinnati Financial, and American Financial Group
For Immediate Release
Chicago, IL – March 15, 2022 – Today, Zacks Investment Ideas feature highlights Invesco KBW Property and Casualty Insurance ETF (KBWP - Free Report) , Cincinnati Financial Corp. (CINF - Free Report) , and American Financial Group, Inc. (AFG - Free Report)
The Best Offense Is a Solid Defense During Market Corrections
Last year was a great year to put the pedal to the metal and let stocks do their thing. The passive fund investor benefitted as volatility was essentially non-existent and drawdowns in the major indices were very limited. It was also a good time to get aggressive with certain individual stocks that were outperforming the market.
The stock market is a dynamic environment – one in which investment themes can change abruptly. When stocks bottomed after the pandemic-induced market plunge in March of 2020, it paid to get offensive and remain that way through the end of last year. This year represents a new kind of challenge with greater volatility and drawdowns. The market has flipped the script.
During market corrections, shifting portfolio allocations to become more defensive is often the best course of action. Defensive industries tend to remain stable through different phases of the economic cycle. Incorporating this less aggressive positioning can help defend against market plunges that likely affect other portfolio holdings.
While certainly not guaranteed, defensive stocks tend to outperform the market when economic growth slows. Insurance is an example of a group that has historically been viewed as defensive. The companies contained within this group provide a service that is consistently purchased and does not fluctuate dramatically. One way we can target this group is through ETFs.
The Invesco KBW Property and Casualty Insurance ETF has been steadily trending upward throughout the past year. KBWP is less than 1% below its 52-week closing high and is outperforming the market this year with a +3.38% return. KBWP invests in companies that are primarily engaged in domestic property and casualty insurance activities.
The Invesco KBW Property and Casualty Insurance ETF is bucking the negative trend of today's action and is currently up +2.39%. The two companies we will discuss below are two of the top fifteen components within KBWP and account for 7.7% of the total holdings.
These companies are part of the Zacks Insurance – Property and Casualty industry group, which currently ranks in the top 26% out of approximately 250 industry groups. This industry group is displaying some favorable characteristics as illustrated below:
Cincinnati Financial Corp.
Cincinnati Financial provides property casualty insurance products in the United States. CINF operates through five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The company's Life Insurance segment provides term, universal and whole life insurance products as well as markets life and disability income insurance and annuities. Cincinnati Financial was founded in 1950 and is headquartered in Fairfield, OH.
A Zacks Rank #1 (Strong Buy) stock, CINF's net written premiums have witnessed a 5.7% CAGR from 2014-2021. The insurance provider has beaten earnings estimates in each of the past six quarters. CINF most recently reported Q4 EPS back in February of $1.97, handily beating the $1.50 Zacks Consensus Estimate. Over the past four quarters, CINF has posted a 38.48% average earnings surprise.
The stock has responded quite well, advancing nearly 22% in the past year and over 12% this year alone. Analysts covering CINF have upped their current-quarter earnings estimates by 5.71% in the past 30 days. The Q1 EPS Zacks Consensus Estimate is now $1.48, reflecting growth of 8.03% relative to the same quarter last year.
American Financial Group, Inc.
American Financial Group is an insurance holding company that provides specialty property and casualty insurance products domestically. The company offers diverse property and transportation insurance such as agriculture and ocean marine products. AFG focuses on specialized commercial products for businesses as well as the sale of traditional fixed and fixed-indexed annuities. American Financial Group was founded in 1872 and is based in Cincinnati, OH.
Net written premiums for AFG are expected to be 8-12% higher than the $5.6 billion reported last year. AFG has surpassed earnings expectations in each of the past six quarters. The insurance provider most recently reported Q4 EPS of $4.12, a 38.26% surprise over the $2.98 Zacks Consensus Estimate. A Zacks #2 (Buy) stock, AFG has delivered a trailing four-quarter average earnings surprise of 39.58%, helping push the stock 46% higher in the past year.
Analysts covering AFG have increased their current-quarter estimates by 2.51% in the past 30 days. The Q1 EPS Zacks Consensus Estimate now stands at $2.45, translating to growth of 2.94% versus the same quarter a year ago.
Keep an eye on these two insurance giants.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022?
Last year's 2021Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don't miss your chance to get in on these long-term buys
Access Zacks Top 10 Stocks for 2022 today >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.