It appears the market is finally starting to see the value in Aflac Incorporated (NYSE: AFL), hence it goes without saying that I'm reiterating my Buy rating for company, first recommended on May 28, 2009 at a price of $36.07. Aflac is another one of those insurers that was rudely treated by Wall Street during the panicked frenzy that gripped markets with the onset of the financial crisis. And it was rude: the Street took AFL's shares from a high of $68 to about $11, basically on the fear that Aflac would incur major losses from European bank hybrid bonds, including the threat of bank nationalization.
However, AFL's mostly high-quality bonds and superior capital position should offset any hybrid bond bumps, so the stock uptrend forecast remains: Aflac is one of the largest sellers of supplemental insurance in the U.S. and is a major cancer-insurance company in Japan (14 million policies).
The Sell/Stop Loss has been raised to $27 from $17. The First Call FY2009/FY2010 EPS estimates for AFL are $4.72 to $5.06.
Stock Analysis: Aflac is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in AFL now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your AFL position before December 2009. Revised Sell/Stop Loss: $29.
- -
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
9-22-2009 @ 10:33PM
Craig Buck said...
Their core business is selling insurance that pays if you get hit by a red truck on a Tuesday afternoon. There's a scandel brewing there somewhere. Where will this company be then?