Home Insurance 3 Value Stocks In The Insurance Sector Now Hitting 2019 Highs – Forbes

3 Value Stocks In The Insurance Sector Now Hitting 2019 Highs – Forbes

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Insurance value stocks making new highs for 2019: all 3 of these can be called “value” because of their low price/earnings ratios and because they trade below book. That’s the beginning of the classic approach to identifying value as described by Warren Buffett’s mentor at Columbia University, Benjamin Graham.

You can read about this type of approach in his book, Security Analysis, or in the much more direct version, The Intelligent Investor. My screen for these only includes those with a steady stream of earnings, which are paying regular dividends and where debt does not reasonably constitute a threat to long-term viability.

Here’s what came up after markets closed for the week:

AXA Equitable Holdings, Inc. trades on the New York Stock Exchange under the symbol EQH. The insurance broker, based in New York City, was established in 1859.

AXA Equitable Holdings, Inc. daily price chart.

stockcharts.com

The stock’s price/earnings ratio sits at 6.9 — this, at a time when the current p/e of the S&P 500 has reached 21.7. AXA Equitable Holdings now trades at a 13% discount to its book value.

Earnings over the last year have been excellent and the 5-year record of earnings is positive as well. Right now, long-term debt slightly exceeds shareholder equity, a concern. The company pays a 2.33% dividend.

AXA Equitable has moved from 15 at the Christmas Eve, 2018 low to its present price of 22. That’s about a 50% gain in a very short period of time, not the kind of move you might typically expect in a low p/e stock in the insurance business.

Lincoln National Corporation is Radnor, Pennsylvania headquartered and trades on the New York Stock Exchange. According to the company’s website, they’ve been around since 1905.

Lincoln National Corporation daily price chart.

stockcharts.com

You can buy a share of the company today at a 4% discount to book value. The price/earnings ratio is down there at 8.77. Lincoln’s long-term debt is exceeded by shareholder equity. The dividend yield comes to 2.28%. This last year’s earnings have been quite good and the record on the 5-year time frame is positive as well.

In late December of last year, Lincoln traded as low as 48 and at the close on Friday had rocketed up to just under 65. This is an extraordinary upward move in a very short time for a staid, old insurance stock.

MetLife, Inc. is New York Stock Exchange listed and based in New York City. This is another insurance company which has been around for awhile — their website says 145 years.

MetLife daily price chart.

stockcharts.com

This well-known insurance company can be purchased for 85% of its book value. The price/earnings ratio is a meager 9.29. The earnings record is positive for this last year and also looks good on the 5-year view. MetLife pays a 3.66% dividend. Shareholder equity is greater than long-term debt. The stock hit as low as 39 late last year and now trades at about 46.

It’s peculiar to see these old school value stocks in this typically sleepy sector moving up so quickly. It’s almost as if something unusual is up.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

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