I’m sure you’ve heard the saying “one man’s trash is another man’s treasure.” What some may not have realized is that these words of wisdom can apply to opportunities in the stock market at times. Today, shares of one of my favorite insurance companies fell after it posted Q1 earnings. But while some may be trashing the stock, I see an excellent buying opportunity. Let’s take a look:
Allstate Corp. (ALL) posted better-than-expected first-quarter results last night. Allstate’s auto policies and homeowner policies grew over last year, as well as other lines of insurance. So compared with the year ago quarter, net income climbed 10.4% to $648 million. Operating earnings were $1.46 per share, which beat the $1.44 consensus estimate by a hair. Over the same period, revenues climbed 3.1% to $8.95 billion. This also beat analysts’ expectations of $7.32 billion in revenue by a hefty 22%.
While ALL has gotten hit with some profit taking, it is still a great investment for the long haul. Looking ahead to the next several quarters, Allstate is expected to maintain sales growth in the mid-single digits, and earnings growth in the upper single-digits. This is while the industry as a whole is expected to see earnings plunge over the next few quarters. Allstate also recently hiked up its quarterly dividend by 7% and initiated a $3 billion stock buyback program.
The bottom line is that Allstate has solid sales and earnings prospects, and is rewarding shareholders handsomely with its stock buybacks and increased dividend. I consider ALL an A-rated Strong Buy.
If you need any further reason to consider Allstate, just look at the competition. I ran seven of Allstate’s top competitors through Portfolio Grader, and as you can see, none of them come close in terms of fundamental and quantitative strength:
So, while some may be dumping ALL shares today, I consider it an excellent buying opportunity.
P.S. In just a few weeks, I’ll be attending The MoneyShow in Las Vegas, May 12 -14…and I’d love to see you there! I always look forward to meeting with you and our fellow subscribers face to face, and admission to the show is free. Simply call 800/970-4355 (be sure to mention priority code # 038778), or visit: https://secure.moneyshow.com/msc/lvms/registration.asp?sid=LVMS15&newReg=t&scode=%20038778.