Lincoln National Corporation (NYSE:LNC) — This life and health insurance company offers annuities, life, group life and a broad range of other insurance products including annuities, disability, dental insurance and employer-sponsored plans.
Like other insurance companies, Lincoln National should benefit from short-term interest rate increases by the Federal Reserve. In addition, LNC stock has made strides in improving its balance sheet strength, and much of its earnings are connected to the sale of equity-linked products.
Standard & Poor’s has a favorable opinion of the insurance subsector and has recently raised their 12-month target on LNC by $17 to $77, which is 11.2X their 2017 operating earnings per share estimate of $6.85. They highlight Lincoln’s product innovations and believe that the stock is undervalued compared to its competitors and further estimate earnings of $7.25 in 2018.
The stock pays an annualized dividend of $1.16, providing a dividend yield of 1.75%.
LNC stock had been in a bull market since early last year (not shown) when, in February, it reversed from the low $30s and established a bull channel that ended in November with a high-volume break-away-gap, followed by a continuation gap.
In just a few weeks the stock ran to a high at $69. From early December to last Wednesday, LNC traded in a narrow band of 4 points, and on weekly charts formed a flag. The stock broke from the flag last Wednesday flashing a new MACD buy signal with a high above $70. Friday’s shallow pullback offers an opportunity to buy this high-performing stock at $69 with a target of $80 for a possible return of over 15%.
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