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Did you miss that April 2009 entry point with the The Travelers (TRV), which I first wrote about on April 24, 2009, at a price of $30.50?Well, here's some good news: TRV has pulled back, slightly (and temporarily, according to my analysis), giving investors who can tolerate moderate-risk a chance to establish a position in a quality insurer and earn an out-sized gain.
Look for TRV to approach $70 by mid-2011, boosted by 2% to 4% premium revenue growth in 2010, as the insurance company takes advantage of new business opportunities. Prudent underwriting, a superior balance sheet, and a $1.44 annual dividend add to the positive mix.
Further, look for non-sexy Travelers to continue to improve underwriting results and to capitalize on the flight-to-quality in property-casualty insurance market.
The First Call FY2010/FY2011 EPS estimates for TRV are $5.62 to $5.84. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, The Travelers' stock has pulled back about 10% this summer, and the dip below $50 is a concern, but the calculation here is that TRV's uptrend should resume shortly.
2010 Outlook: I view The Travelers as a long-term play, but if investors are looking to sell TRV within the year, it's probably best to take your profits after it rises to $57-59, if it fails to clear $60.
Stock Analysis: I consider The Travelers to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in TRV now, then buy another 25% in one month if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my TRV position before October 2010, and I'd put a sell/stop loss at $30.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2010/FY2011 EPS estimates for TRV are $5.62 to $5.84. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, The Travelers' stock has pulled back about 10% this summer, and the dip below $50 is a concern, but the calculation here is that TRV's uptrend should resume shortly.
2010 Outlook: I view The Travelers as a long-term play, but if investors are looking to sell TRV within the year, it's probably best to take your profits after it rises to $57-59, if it fails to clear $60.
Stock Analysis: I consider The Travelers to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in TRV now, then buy another 25% in one month if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my TRV position before October 2010, and I'd put a sell/stop loss at $30.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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