1. Lincoln National (LNC)
Company Profile: Lincoln National, with assets of $153 billion, offers annuities, life insurance, 401(k) plans, savings plans, and comprehensive financial planning and advisory services.Sector Representation: Financials Share Price: $20.85 (Dec. 5) Potential Upside: 82.3% based on a price target of $38 Investment Thesis: Analyst Edward Spehar prefers insurance out of the entire financials industry, and Lincoln National stands out because of the potential for dividends and buybacks. "The company has a 10% return on equity today with some upward bias given that tangible ROE (or an indicator of potential new business returns) is closer to 13% and excess subsidiary capital and free cash flow should allow for balance sheet deleveraging and increased payouts to shareholders (dividends and share buybacks) over time," Spehar writes. "All of these factors suggest that the share price should conservatively move to a 10%-15% discount to book value, in our view." >>To see these stocks in action, visit the Merrill Lynch's 10 Favorite Stocks for 2012 portfolio on Stockpickr. -- Written by Robert Holmes in Boston.
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