The U.S. economy continues to show signs of improving slowly but surely, and I am optimistic about the prospects for the economy and the market in 2014.
One area that is starting to see signs of increased demand and better pricing is the property and casualty insurance industry. As economic conditions improve, so will pricing in this industry as people once again begin to think about protecting the things they own from a possible loss. As is the case with every other segment of the stock market right now it is very important to focus on those P&C insurance stocks with the very best fundamentals as they are likely to capture the bulk of the new business as well as the attention of the large institutional investors whose buying pressure can push insurance stocks higher in 2014. And that’s why we have Portfolio Grader.
Assurant (AIZ) is a specialty insurance company that stands to benefit from strong social trends as well as an improving P&C market. These days, it seems everyone from the smallest toddler to senior citizens has a smart phone, and Assurant writes warranties and extended service contracts on smart phones as well as other products like personal computers, electronics, automobiles and appliances.
Assurant also offers credit insurance that provides from unexpected events that could make it difficult to meet your financial obligations in certain financing transactions. AIZ also sells preneed life insurance and some small group medical insurance. AIZ stock has exceeded Wall Street estimates in three of the past four quarters and investors as well, and Portfolio Grader have noticed the improving fundamentals of the company. AIZ stock was upgraded to an “A” last month and remain a “strong buy” at the current price.
CorVel Corporation (CRVL) provides service to the insurance industry that allows them to operate more efficiently. It offers medical cost containment and managed care services to manage the medical costs of worker’s compensation and auto claims in the United States. Services include bill review, PPO management, reimbursement, pharmacy, and auto claims management. Customers for CRVL’s products include government agencies, insurance companies and third-party administrators. The company is reporting record revenues and earnings and the fantastic fundamentals have been noticed by Portfolio Grader, and the stock has been rated “A” since July. The stock remains a “strong buy” at the current price.
Investors tend to think of the larger insurance companies like AIG (AIG), Travelers (TRV) or Chubb Group (CB) when they consider investing in insurance related stocks. However those companies shave lukewarm fundamentals and are not going to attract the type of buying pressure needed to push the stock significantly higher. Using Portfolio Grade we can identify those stocks with best of the best fundamentals that can lead to huge buying by large institutions and rack up big gains in the year ahead.
Louis Navellier is the editor of Blue Chip Growth.