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4 Insurance Stocks Surge More Than 30% in a Year's Time
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The insurance industry has been reaping benefits of some positive trends that have helped it deliver better-than-expected results and banking on the same, we anticipate the same for the remaining year. Strong economy reflected by a gradual improvement in interest rates and the growing gross domestic product (GDP) along with the tax cut and a visibly lower level of catastrophe loss have restored investors’ faith in the industry and we hope this positive momentum to continue as the year progresses.
Unpredictable weather-related events coupled with other challenges like regulatory uncertainty can throw the industry out of its growth gear. However, the insurers are expected to consistently focus on achieving two important objectives — the top-line improvement as well as bolstering the bottom line.
Improving interest rate has come as a boon to insurers with the Fed indicating two more hikes this year, lending an impression of aggressive rate increases. With the current interest rate ranging between 1.75% and 2%, we are hopeful that a rising rate environment will aid investment income, an important component of insurers’ revenues.
This apart, inflation has finally reached the Fed’s 2% target after failing to achieve the same for the past six years. Further, the unemployment rate came in at 3.9% with the GDP estimated to grow 2.8% for 2018 before averaging at 2.4% in 2019. This apart, a recovering housing market looks set to enhance insurable exposures and premiums written. Also, strategic merger and acquisition activity is likely to add more fuel to the insurance industry’s already upbeat performance.
Additionally, a favorable underwriting performance, translating into improving combined ratios, can further boost results in the near term. Moreover, the insurers stand to benefit from a broader invested asset base and alternative assets. While a continued capital inflow will not only back insurers to counter a near-term volatility but also cushion the impact of any unfavorable occurrences, keeping the industry’s growth trend active.
Key Picks
Riding high on the above-mentioned strengths, we have zeroed in on four stocks having displayed more than a modest performance. We expect this momentum to continue for the rest of the year. These stocks also carry an encouraging VGM Score of A and B and we expect the same to deliver an impressive performance on the basis of northbound estimate revisions, a solid Zacks Rank and share price outperformance in a year’s time. Our research shows that stocks with a commendable VGM Score of A or B when combined with a bullish Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mayfield Village, OH-based The Progressive Corporation (PGR - Free Report) provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 8.4% upward to $4.50 over the past 60 days. This is also reflected in the company’s Zacks Rank of 1. The insurer boasts a VGM Score of B.
The stock has soared 57.3%, outperforming the industry’s increase of 19.6% and the Zacks S&P 500 Composite’s gain of 18%.
Tampa, FL-based HCI Group, Inc. (HCI - Free Report) primarily engages in the property and casualty insurance business in the state. The stock has seen the Zacks Consensus Estimate for 2018 bottom line move 0.5% north to $3.91 over the past 60 days. This is also justified by the company’s Zacks Rank #2. The insurer carries a VGM Score of B.
The stock has rallied 34.8%, outperforming the industry’s rise of 19.5% and the Zacks S&P 500 Composite’s gain of 18%.
Headquartered in West Des Moines, IA, American Equity Investment Life Holding Company (AEL - Free Report) provides life insurance products and services in the United States. The stock has seen the consensus mark for current-year earnings being raised 3.5% to $3.55 over the past 60 days. This is also indicated by the company’s Zacks Rank of 2. The life insurer has a VGM Score of B.
The stock has surged 42.7% against the industry’s decline of nearly 9% and the Zacks S&P 500 Composite’s gain as mentioned above.
Richmond, VA-based Genworth Financial, Inc. (GNW - Free Report) provides insurance and homeownership solutions in the United States and internationally. The stock has seen the consensus estimate for current-year earnings being raised 13.3% to $1.11 over the past 60 days. This is also represented by the company’s Zacks Rank of 2. The insurer carries a VGM Score of B.
The stock has jumped nearly 35% against the industry’s decrease of 9% and the Zacks S&P 500 Composite’s gain of 18%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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4 Insurance Stocks Surge More Than 30% in a Year's Time
The insurance industry has been reaping benefits of some positive trends that have helped it deliver better-than-expected results and banking on the same, we anticipate the same for the remaining year. Strong economy reflected by a gradual improvement in interest rates and the growing gross domestic product (GDP) along with the tax cut and a visibly lower level of catastrophe loss have restored investors’ faith in the industry and we hope this positive momentum to continue as the year progresses.
Unpredictable weather-related events coupled with other challenges like regulatory uncertainty can throw the industry out of its growth gear. However, the insurers are expected to consistently focus on achieving two important objectives — the top-line improvement as well as bolstering the bottom line.
Improving interest rate has come as a boon to insurers with the Fed indicating two more hikes this year, lending an impression of aggressive rate increases. With the current interest rate ranging between 1.75% and 2%, we are hopeful that a rising rate environment will aid investment income, an important component of insurers’ revenues.
This apart, inflation has finally reached the Fed’s 2% target after failing to achieve the same for the past six years. Further, the unemployment rate came in at 3.9% with the GDP estimated to grow 2.8% for 2018 before averaging at 2.4% in 2019. This apart, a recovering housing market looks set to enhance insurable exposures and premiums written. Also, strategic merger and acquisition activity is likely to add more fuel to the insurance industry’s already upbeat performance.
Additionally, a favorable underwriting performance, translating into improving combined ratios, can further boost results in the near term. Moreover, the insurers stand to benefit from a broader invested asset base and alternative assets. While a continued capital inflow will not only back insurers to counter a near-term volatility but also cushion the impact of any unfavorable occurrences, keeping the industry’s growth trend active.
Key Picks
Riding high on the above-mentioned strengths, we have zeroed in on four stocks having displayed more than a modest performance. We expect this momentum to continue for the rest of the year. These stocks also carry an encouraging VGM Score of A and B and we expect the same to deliver an impressive performance on the basis of northbound estimate revisions, a solid Zacks Rank and share price outperformance in a year’s time. Our research shows that stocks with a commendable VGM Score of A or B when combined with a bullish Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mayfield Village, OH-based The Progressive Corporation (PGR - Free Report) provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 8.4% upward to $4.50 over the past 60 days. This is also reflected in the company’s Zacks Rank of 1. The insurer boasts a VGM Score of B.
The stock has soared 57.3%, outperforming the industry’s increase of 19.6% and the Zacks S&P 500 Composite’s gain of 18%.
Tampa, FL-based HCI Group, Inc. (HCI - Free Report) primarily engages in the property and casualty insurance business in the state. The stock has seen the Zacks Consensus Estimate for 2018 bottom line move 0.5% north to $3.91 over the past 60 days. This is also justified by the company’s Zacks Rank #2. The insurer carries a VGM Score of B.
The stock has rallied 34.8%, outperforming the industry’s rise of 19.5% and the Zacks S&P 500 Composite’s gain of 18%.
Headquartered in West Des Moines, IA, American Equity Investment Life Holding Company (AEL - Free Report) provides life insurance products and services in the United States. The stock has seen the consensus mark for current-year earnings being raised 3.5% to $3.55 over the past 60 days. This is also indicated by the company’s Zacks Rank of 2. The life insurer has a VGM Score of B.
The stock has surged 42.7% against the industry’s decline of nearly 9% and the Zacks S&P 500 Composite’s gain as mentioned above.
Richmond, VA-based Genworth Financial, Inc. (GNW - Free Report) provides insurance and homeownership solutions in the United States and internationally. The stock has seen the consensus estimate for current-year earnings being raised 13.3% to $1.11 over the past 60 days. This is also represented by the company’s Zacks Rank of 2. The insurer carries a VGM Score of B.
The stock has jumped nearly 35% against the industry’s decrease of 9% and the Zacks S&P 500 Composite’s gain of 18%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>