I'm reiterating my Buy rating for The Travelers Companies (NYSE: TRV), first recommended on April 24, 2009 at a price of $39.50. If you purchased TRV at that time, you're up a decent 20%. Simply, look for The Travelers to continue to improve underwriting results and to capitalize on the flight-to-quality in property-casualty insurance market. Further, TRV's P/E of 9 gives those who didn't purchase shares in April an opportunity to do so now at an attractive price.
True, TRV may have to add to loss reserves for certain liability coverage lines, but the view from here argues that the aforementioned in no way deflects from the appeal of this demonstrated, diversified insurance business model. The First Call FY2009/FY2010 EPS estimates for TRV are $5.20 to $5.39.
Stock Analysis: The Travelers is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in TRV now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your TRV position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $22.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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