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TheStreet Open House

10 Buy-Rated Insurance Stocks with up to 40% Upside

NEW YORK ( TheStreet) -- By any measure insurance stocks are cheaply priced, and with industry names avoiding having regulatory targets on their backs, investors should take a second look at the group.

Starting with a list of U.S. insurance stocks rated a "buy" by TheStreet Ratings, we have pared down the group to companies with at least one sell-side "buy" recommendation that we could verify, and names with three-month average daily trading volume of over 50,000 shares.

TheStreet's proprietary stock ratings model produces a composite rating that incorporates a stock's performance and volatility, incorporating technical and fundamental analysis.

We've included information on the estimates provided by property and casualty carriers for catastrophe losses related to the tornados and floods that have caused so much damage over the past two months in the Southeast and Midwest.

Gavin Magor, a senior financial analyst with Weiss Ratings, said he doesn't "expect property and casualty insurers to have a breakout year, as we have already seen substantial claims from flooding, snow melt and tornados, and we have only just entered the hurricane season."

Magor said that life insurers "depend almost entirely on investment income for profitability, and 2011 is not shaping up to be a good year if we look at the performance of the stock market."

For a health insurance industry in flux, Magor says "the bigger the better, as small insurers will continue to struggle."

All 10 of these stocks are trading very cheaply relative to forward earnings.

Of course, when considering consensus price targets, it's important to keep overall sentiment in mind. Many analysts with neutral ratings don't provide a price target, and only six of these ten insurance stocks have a majority of analysts rating them a buy.

The following are the 10 buy-rated and actively traded insurance companies, with the most upside implied by mean price targets among analysts polled by FactSet. All data was provided by SNL Financial:

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