Opinions
Mike MacBain
Aon Corp.
AON-N
TOP PICK
Oct 06, 2014
$87.270
Stock price when the opinion was issued
insurance
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TOP PICK
A global insurance broker for larger corporate entities. They do reinsurance, risk management, pensions and benefits. They are merging right now with Willis Tower Watson. The merger has been very promising for investors. It currently trades at 20x PE and 5% free cashflow so it should be a good buy. (Analysts’ price target is $219.23)
insurance
DON'T BUY
The DoJ alleges the Aon-Willis Towers Watson deal will suppress competition He won't touch either. If the companies decide to fight this, it will be a long court battle. You can't short this, because everyone involved must unwind positions. You may think these stocks are a bargain, but he would avoid them.
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PAST TOP PICK
(A Top Pick Feb 18/22, Up 13%) Grows mid-single digits. Big expectations not built in, so it skated through the pounding last year. It's moved up, so not a hot buy right now. Will do well over the long term. Cross-selling globally, layer in acquisitions, free cashflow goes to share buybacks.
insurance
TOP PICK
BUY
Historically, steady earnings growth and pretty solid ROIC. Technically, chart looks pretty strong, trading above rising 200-day and 200-week moving averages. Decent valuation of 21x forward earnings, 12% long-term growth. Yes, PEG is above 1, but you're paying up a bit for steady earnings growth.
insurance
Long AON Senior Unsecured Debentures 4.760%, Short Government of Canada 1.25% of March 2018. Likes the company because it is a very highly rated investment grade bond, the only one they have in Canada. A strong company with good credit that generates stable earnings and has good growth potential. Bond trades at a higher spread than all their other bonds.(Stock price will not match as this is a bond.)