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MetLife Buys Back Its Stock; Should You Now Buy MetLife?

NEW YORK (TheStreet) -- Timing is everything, and right now may be the right time to add MetLife (MET - Get Report) to your portfolio.

The insurer's stock is cheap. It currently trades around $54.75, up 2% for the year to date. It has a 2014 price-to-earnings ratio of 9.6 and a price-to-book value of 1.0, making it one of the cheapest stocks in the S&P 500 (SPY), the exchange-traded fund proxy for the S&P 500.

The insurance company also has a 2.55% dividend yield, offers global reach, a diverse product line and sound management. MetLife even announced a $1 billion share buyback program. The last time MetLife repurchased shares was in 2008, the year the financial crisis started.

In addition, this week the U.S. Senate passed legislation that would give regulators more flexibility in how they apply capital standards to insurers. It now needs approval in the House of Representatives.

If signed into law by President Obama, the new law would place high capital standards on entities deemed non-bank systemically important financial institutions, or SIFIs. MetLife has not been designated a SIFI but competitor Prudential (PRU) has been.

The Federal Reserve is in the process of working out how to apply capital standards to help financial institutions withstand future economic meltdowns. According to a MetLife statement when it announced the buyback Tuesday, "We anticipated that the non-bank SIFI capital rules would be known by now, but recent statements by the Federal Reserve suggest that we may not see draft rules until 2015."

With a return on equity of near 12%, MetLife is well positioned with broad markets and product lines. In addtion to its U.S. business, it has operations in Asia, Europe and Latin America -- 30% of its profits come from international markets.

It also offers a diverse product line. To individuals it offers life insurance and annuities. To corporate employees it provides dental, disability and group life insurance. It also offers guaranteed investment contracts, the stable value offering, to many defined contribution plans. Its 2013 revenue came in at $70.4 billion.

In 2008, MetLife shares were pummeled but it seems management has learned from the experience. The company has begun to reduce sales of variable annuities that offer guarantees, which were a big problem for the company during the financial meltdown. MetLife is also getting out of the long-term care market.

MetLife is a stock to own. Industry experts place a price target of $67 per share, a 22% upside over current market price. With a super low P/E and Price to Book ratio, a great brand name, global reach and a solid and smart management team, MetLife could fly as high as its iconic blimp.

At the time of publication, the author had a position in PRU.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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