Back to top

Image: Bigstock

Why You Must Hold Onto Travelers (TRV) in Your Portfolio

Read MoreHide Full Article

The Travelers Companies, Inc. (TRV - Free Report) occupies a strong market position in the property and casualty (P&C) industry, which has aided the company to become one of the leading writers of auto and homeowners’ insurance and commercial U.S. property-casualty insurance.

The property and casualty (P&C) insurer is anticipated to benefit from a strong market position and reap economies of scale. The company also remains committed toward implementing pricing actions to continue the increasing returns.

In addition, the Zacks Rank #3 (Hold) P&C insurer’s inorganic growth story remains impressive. Besides, the company undertakes strategic buyouts to diversify operations and boost the operational performance. These initiatives are expected to accelerate its growth.

Travelers has been generating sufficient capital to engage in shareholder-friendly moves. It also has a robust liquidity position and is making efforts to improve leverage ratios.

Notably, shares of the P&C insurer gained 4.65% in the last six months, outperforming the Zacks categorized Property and Casualty Insurance industry’s increase of 4.34%. We expect strong top-line growth, robust capital position and strategic initiatives to accelerate the company’s growth that will continue to drive the stock higher in the near term.



However, exposure to catastrophe losses will continue to adversely affect the company’s underwriting results and will raise concerns in the near term.

Additionally, the company anticipates about $15–$20 million of lower after-tax net investment income on a quarterly basis in 2017, compared with 2016.

Nonetheless, the company has a trailing 12-month return on equity (ROE) of 12.0%, higher than the industry’s 6.5% average. Besides, the company’s expected long-term earnings growth is pegged at 7.70%.

Stocks to Consider

Some better-ranked stocks from the insurance industry include Assurant, Inc. (AIZ - Free Report) , Cigna Corporation (CI - Free Report) and Old Republic International Corporation (ORI - Free Report) . Each stock holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assurant offers risk management solutions for housing and lifestyle markets worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 6.82%.

Cigna provides insurance plus related products and services in the United States and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 1.35%.

Old Republic deals in insurance underwriting and related services business, primarily in the U.S. and Canada. The company delivered positive surprises in two of the last four quarters with an average beat of 12.71%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>  

Published in