Prudential (PRU-N), Metropolitan Life (MET-N) or a US bank? He likes financials for the long haul. The only group that has not fully recovered from the 2008 downturn. However, there has been a tremendous run up since the election on the hopes for higher interest rates because of stronger growth from some of the Trump policies and less regulations. He likes them both. They are both trading close to BV. However, insurance is becoming more and more of a commodity business, so he thinks he would give a little edge to this one for being bigger. Currently he likes the life insurers because the banks have run up so much.
Higher rates are actually good for insurance companies. Yield is about 2.9%, growing at single digits and he prefers double-digit growth. The whole industry has a tailwind, and you can see it if you look at the KIE ETF.
Does not own shares. Financial services and insurance. Valuation is low and could be good time for investors. Does not own shares. Fundamentally a 6/10. Could be volatile. Better options out there for investors.
(A Top Pick Sep 27/22, Up 27.2%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with MET has achieved its target at $77. To remain disciplined, we recommend covering half the position and trailing up the stop loss (from $62) to $67. If triggered, this would result in a net investment gain of 18%.
Switch from Canadian insurers to MET? Hit a new high today. Likes it. Financials are at a historical discount. Likes banks, insurers and diversified financials. He wouldn't switch, as some Canadian valuations are quite cheap. Nice dividend of 2.6%.
Model price of $87.26, 18% upside. Market really liked its write down on balance sheet or spinoff. Likes it here. Turned itself around. Will probably go to $80, and he'll evaluate it there.
(A Top Pick Sep 27/22, Up 22.4%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with MET is progressing well. To remain disciplined, we now recommend trailing up the stop (from $52.50) to $62.00.
Stockchase Research Editor: Michael O'Reilly This world leader in insurance and benefits is a TOP PICK. The company just announced a deal along with PRU to assume the $16 billion pension obligation of IBM -- right up its alley. We like the value here as the company is trading under book value, just beat analyst earnings expectations, and is projected to trade 7x earnings. It has managed to increase cash reserves, while aggressively retiring debt and buying back shares. Its dividend is backed by a payout ratio under 50% of cash flow. We recommend placing a stop loss at $52.50, looking to achieve $77 -- upside potential of 25%. Yield 3.2% (Analysts’ price target is $77.25)
AIG-N vs. MET-N. AIG-N has been recapitalizing since the disaster of the financial crisis. MET-N did not suffer these issues. The life business is in pretty decent shape but he prefers Canadian lifecos. (Analysts’ price target is $55.57)
It’s pretty cheap, trading at 8.1 times. Their earnings in July were double year over year and beat expectations. They are growing globally and it’s a safe name with a low valuation. Couldn’t go wrong with this choice in the long term.
MET vs. BAC. Dynamics of the two are different, so hard to compare. FMV potential of both is huge. But the market won't go, because interest rates are falling. Aren't any drivers to escalate earnings. Very cheap, but who knows when they're going to pop? (Analysts’ price target is $53.19)
The balance sheet is impaired and there should be write-offs, which he hasn't seen. He sees 32% upside with a $64 model price, but he'd be happy seeing this at $53.80. He would recommend this stock above this price. He has recommended MET before, but MET just can't get going. The balance sheet is ugly. Also, if interest rates fall to zero, all insurance companies will get hit.
Prudential (PRU-N), Metropolitan Life (MET-N) or a US bank? He likes financials for the long haul. The only group that has not fully recovered from the 2008 downturn. However, there has been a tremendous run up since the election on the hopes for higher interest rates because of stronger growth from some of the Trump policies and less regulations. He likes them both. They are both trading close to BV. However, insurance is becoming more and more of a commodity business, so he thinks he would give a little edge to this one for being bigger. Currently he likes the life insurers because the banks have run up so much.