Fortegra Financial (FRF) is a provider of payment protection and other insurance services. The company has worked to expand its product offerings in the fastest-growing aspects of insurance to increase its customer base while meeting their biggest demands. That growth potential is still strong, and a string of acquisitions will also help build the company’s business, and open up new sources of revenue.
Through the recent sale of its insurance brokerage unit, FRF will deleverage its balance sheet and gain additional capacity for stock buybacks in the future. The whole company could be sold, too, as management recently indicated it would consider all alternatives to add to shareholder value.
FRF has the recurring revenue and predictable earnings model that is currently in favor with the market. Further growth is ahead, and it is definitely a possible takeover target. Even so, management has internal growth plans and is cutting costs, so I like its potential.