Monday October 08, 2007
In a screen for value stocks, Richard Moroney in Dow Theory Forecasts sees potential in two insurance plays – MetLife (NYSE: MET) and UnitedHealth Group (NYSE: UNH).
“MetLife, the largest life-insurance company in the U.S., has about $3.6 trillion of life insurance in force. MetLife has delivered strong results in recent quarters.
“Strong gains in assets under management , solid underwriting performance, and strict expense controls helped drive per-share-profit growth of 23% in the
year ended June.
“Consensus estimates have been trending upward over the last three months and now project per-share-profit growth of 13% i n 2007 and 4% in 2008, targets MetLife could exceed. MetLife trades at less than 12 times projected year-ahead earnings. MetLife is a Buy and a Long-Term Buy.
“UnitedHealth Group's balanced business mix includes both risk-based products and fee-based services, and the company is also well diversified across geographic regions and industries.
“The firm has developed a steady stream of new products -- with an emphasis on the small-business market -- in an effort to attract new members and retain current ones.
"An aggressive acquisition strategy has also helped boost growth in recent years. UnitedHealth spent about $2.4 billion on stock buybacks in the first half of 2007 and plans to repurchase another $2 billion or so in the second half.
“Consensus estimates project per-share-profit growth of 17% i n 2007 and 14% in 2008. At 13 times estimated year-ahead earnings of $3.66 per share, the stock trades below its five-year average forward P/E of 15. UnitedHealth is a Long-Term Buy.”
