This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Insurance Stocks Are Ready to Rally

NEW YORK ( TheStreet) -- Are insurance stocks due for another growth spurt?

Conseco (CNO - Get Report), PMI Group (PMI) and Genworth Financial (GNW) led the pack from March's low in stock prices, tripling or quadrupling in a short span.

Radian (RDN - Get Report) ran ahead over the summer, more than doubling, but by the beginning of September, investors' concerns mounted as the economy continued to show signs of weakness. Nine insurance stocks had recorded share-price declines over the previous three months, including Amerigroup (AGP) and MBIA (MBI - Get Report).

In the past three months, companies that have been most exposed to the economy have fared the worst. They include Kingsway Financial Services (KFS), Ambac (ABK) and MBIA, down 68%, 48% and 41%, respectively. Forty-seven percent of insurance stocks have fallen in the past three months.

Gainers include WellCare (WCG), up 42%, and Ameriprise (AMP), up 32%. Insurance shares, on average, have risen 0.2%, reflecting uncertainty even as MetLife (MET - Get Report) released positive earnings projections.

Price-to-earnings ratios are little changed, according to SNL Financial. The average insurance stock has a P/E ratio of 6.77 versus 6.61 in June. The average price-to-book value has dropped from 90.4% to 88.7%.

There has been waning interest in insurance stocks. Trading volume stands at 78% of the past month's. Short sellers, who bet on share-price declines, have helped to lower the short ratio from 5 to 4.56 in the past week.

It's unlikely investors will find the stocks as attractively priced again. The combination of good value, low P/E ratios and some volatility suggest the insurance sector is primed to take off with the economy.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CNO $18.35 0.88%
MBI $6.01 -5.65%
MET $55.99 0.94%
PGR $27.83 0.07%
RDN $18.76 0.86%

Markets

DOW 17,619.51 +23.16 0.13%
S&P 500 2,063.12 +5.48 0.27%
NASDAQ 4,986.8670 +28.3990 0.57%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs