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A glimmer of hope was cast upon the stock market last week, as lower-than-expected inflation data from October ignited the largest weekly rally since March. With many stocks beginning to show strength, investors may be wondering if the momentum can continue. Stocks that held up well this year illustrated their immunity to the volatility, and in past bear markets we’ve often seen these stocks continue their bullish runs as the market turns the corner.
It remains to be seen if this recent move is actually the bottom or just another bear market rally. Certainly, investors applauded the mild CPI print, but lingering macroeconomic headwinds remain. And while the market is a forward-looking mechanism – typically bottoming well before relevant economic data – we may not be out of the woods just yet.
So as tempting as it may be to pull the trigger on those beaten down technology stocks, the more prudent approach is to stick with the current leaders until we have more evidence in hand that growth names can put together a sustained rally.
Despite a very difficult year for most stocks, we’ve seen pockets of strength in several different sectors such as insurance. These pockets have illustrated resilience, and rather than succumb to higher inflation, they’ve actually benefitted from higher prices.
The Zacks Insurance – Accident and Health industry group is ranked in the top 7% out of approximately 250 industry groups. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. We can see below that this group has outperformed the market this year at nearly every turn:
Image Source: Zacks Investment Research
Despite the impressive price performance, this industry remains relatively undervalued as we can see below:
Image Source: Zacks Investment Research
Quantitative research studies have shown that roughly half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top-rated groups, we can dramatically improve our odds of success. Let’s take a deeper look at a stock that is breaking out to the upside within this leading industry.
Aflac provides supplemental health and life insurance products. The company offers accident, short-term disability, cancer, critical illness, dental, vision, long-term care and disability, and term and whole life insurance products in the U.S. and Japan. AFL sells its products through sales associates, brokers, independent corporate agencies, and individual agencies.
AFL has exceeded earnings estimates in each of the past four quarters, with an average surprise of 4.83% over that timeframe. The insurance giant most recently reported Q3 EPS last month of $1.23/share, a 0.82% beat over consensus estimates. Sales during the third quarter rose 4.43% to $4.82 billion, also surpassing estimates. Shares have bucked the trend this year, rising nearly 23% and recently hitting a 52-week high.
Image Source: Zacks Investment Research
As if investors needed another reason to consider this stock, the company has a strong capital management strategy in place. AFL has raised its dividend for 39 straight years, illustrating its ability to consistently navigate uncertain economic environments. In addition, during the first half of 2022, Aflac repurchased $1.2 billion worth of shares.
As the market looks to close out 2022 on a positive note, make sure to keep an eye on AFL and the insurance space as the group as well as the stock appear primed to continue their outperformance.
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Insurance Behemoth Soars Amid Renewed Market Strength
A glimmer of hope was cast upon the stock market last week, as lower-than-expected inflation data from October ignited the largest weekly rally since March. With many stocks beginning to show strength, investors may be wondering if the momentum can continue. Stocks that held up well this year illustrated their immunity to the volatility, and in past bear markets we’ve often seen these stocks continue their bullish runs as the market turns the corner.
It remains to be seen if this recent move is actually the bottom or just another bear market rally. Certainly, investors applauded the mild CPI print, but lingering macroeconomic headwinds remain. And while the market is a forward-looking mechanism – typically bottoming well before relevant economic data – we may not be out of the woods just yet.
So as tempting as it may be to pull the trigger on those beaten down technology stocks, the more prudent approach is to stick with the current leaders until we have more evidence in hand that growth names can put together a sustained rally.
Despite a very difficult year for most stocks, we’ve seen pockets of strength in several different sectors such as insurance. These pockets have illustrated resilience, and rather than succumb to higher inflation, they’ve actually benefitted from higher prices.
The Zacks Insurance – Accident and Health industry group is ranked in the top 7% out of approximately 250 industry groups. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. We can see below that this group has outperformed the market this year at nearly every turn:
Image Source: Zacks Investment Research
Despite the impressive price performance, this industry remains relatively undervalued as we can see below:
Image Source: Zacks Investment Research
Quantitative research studies have shown that roughly half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top-rated groups, we can dramatically improve our odds of success. Let’s take a deeper look at a stock that is breaking out to the upside within this leading industry.
Aflac Inc. (AFL - Free Report)
Aflac provides supplemental health and life insurance products. The company offers accident, short-term disability, cancer, critical illness, dental, vision, long-term care and disability, and term and whole life insurance products in the U.S. and Japan. AFL sells its products through sales associates, brokers, independent corporate agencies, and individual agencies.
AFL has exceeded earnings estimates in each of the past four quarters, with an average surprise of 4.83% over that timeframe. The insurance giant most recently reported Q3 EPS last month of $1.23/share, a 0.82% beat over consensus estimates. Sales during the third quarter rose 4.43% to $4.82 billion, also surpassing estimates. Shares have bucked the trend this year, rising nearly 23% and recently hitting a 52-week high.
Image Source: Zacks Investment Research
As if investors needed another reason to consider this stock, the company has a strong capital management strategy in place. AFL has raised its dividend for 39 straight years, illustrating its ability to consistently navigate uncertain economic environments. In addition, during the first half of 2022, Aflac repurchased $1.2 billion worth of shares.
As the market looks to close out 2022 on a positive note, make sure to keep an eye on AFL and the insurance space as the group as well as the stock appear primed to continue their outperformance.