Opinions
Gordon Reid
The Hanover Insurance Group
THG-N
BUY
Nov 13, 2013
$60.800
Stock price when the opinion was issued
Financial Services
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PAST TOP PICK
(A Top Pick July 17/13. Up 22.48%.) Their bond portfolio is basically not giving them anything. With higher interest rates, that is going to be an additive to the company. Through the winter, with the storms and everything, their combined ratio climbed a little bit. They were covering their underwriting premiums, and that has not reversed. Thinks this should continue to move higher.
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TOP PICK
P&C. Rough third quarter beat down earnings, but the stock really didn't move. Markets understand that insurance companies have to pay out from time to time, but this gives them pricing power. Expects $11 EPS next year and to grow double digits for the next few years. Interest rates going up is also good. Yield is 2.25%. (Analysts’ price target is $151.67)
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This has done quite well. They are in a good position. There is some pricing power in the insurance business. They are also a property/casualty insurer. Trading well below Book. There is some upside on a valuation basis. Well managed.