Chubb Ltd (NYSE:CB) — We could see a sell-off in CS stock today following a warning issued by the company after Tuesday’s close. The property and casualty insurer estimated its natural catastrophe losses would be up 54% in Q2 from the previous quarter, totaling $390 million before taxes. Management had previously projected a pre-tax losses of $280 million, but was forced to raise it due to a high number of natural disasters around the globe. The company is scheduled to report second-quarter earnings on July 26.
If CB stock does fall on this news, we can use that to our advantage since this is a fundamentally and technically sound pick.
S&P Capital IQ Equity Research rate CB stock a “Buy.” Its analysts note shares are undervalued based on Chubb’s superior underwriting results and above-average revenue growth compared with its peers, even with the negative currency impact of the stronger U.S. dollar. They have a 12-month fundamental target of $135 on CB stock.
Turning to the chart, we see that CB stock has been trading in a well-defined bull channel since October. Its 50-day moving average crossed up through its 200-day moving average in November, forming a golden cross, a long-term buy signal.
Since then, CB stock has maintained a solid uptrend with prices fluctuating around the 50-day moving average. The MACD indicator is indicating shares are slightly overbought, but as I mentioned, we could get a pullback that takes them down to my buy under price of $125, which is just below the 50-day moving average.
Both traders and investors should try to buy CB stock at $125. The trading target is $135, which would result in a gain of 8%. Investors can hold for higher returns and income. Chubb pays an annual dividend of $2.76 per share for a forward yield of 2.1%.