CHICAGO, Dec. 19, 2013 /PRNewswire/ -- Zacks Equity Research highlights TravelCenters Of America (NYSE: TA-Free Report) as the Bull of the Day and Ashland (NYSE: ASH-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheStanCorp Financial Group Inc. (NYSE: SFG-Free Report), Prudential Financial Inc. (NYSE: PRU-Free Report) and American Equity Investment Life Holding Co. (NYSE: AEL-Free Report).
Here is a synopsis of all five stocks:
TravelCenters Of America (NYSE: TA-Free Report) recently priced a stock offering of 6.5M shares at $9.25 and the stock has suffered since. Still, analysts have been increasing estimates for this year and next and the stock is a Zacks Rank #1 (Strong Buy) and it is the Bull of the Day.
For the past several months, US auto sales have shown consistent growth. The sequential growth has small, but the year over year growth was impressive. There was a big drop off in September as new models hit the showroom floors, but as we rolled into the November 1 sales numbers, the growth returned.
This page from the Wall Street Journal breaks down auto sales in a fairly high level of detail. Its interesting stuff no doubt, but the overwhelming idea that you should get from scanning that page is that people are buying new cars.
TravelCenters of America operates travel centers primarily along the US interstate highway system. It offers diesel fuel and gasoline; and operates full service restaurants primarily under the Iron Skillet and Country Pride brand names. As of August 12, 2013, it operated and franchised approximately 500 travel centers in 42 states and in Canada under the TravelCenters of America, TA, and Petro Stopping Centers brand names. The company was founded in 1992 and is headquartered in Westlake, Ohio.
You probably have heard of beats and raises, but how about beat and stock offerings? Well that just happened for TA, as they recently beat estimates and then a few days later offered 6.5M shares at $9.25 per share, raising roughly $60 million.
Over the last 12 months, Ashland has had four earnings reports and two reports were beats and the other two were misses. When the rubber hits the road, though, the stock has fallen in session following earnings releases three out of those four times.
This pattern of hits and misses are not what most investors want to see.
Ashland is a specialty chemicals company. The company operates through four segments: Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials, and Ashland Consumer Markets. The company was founded in 1924 and is headquartered in Covington, Kentucky.
Estimates for ASH have been falling all year. Back in January of this year, the Zacks Consensus Estimate was at $8.95 and it was $7.65 in July and is now down to $6.95.
Solid Road Ahead for 3 Insurers
The gradually improving economy will spur life insurance purchases. As the financial protection and savings needs of customers increase, retirement and life insurance purchases, which were put on hold during the financial downturn, will be urgently needed. Along with the improving economy, the life insurers are poised to benefit from the growing demand for guaranteed retirement savings products from baby boomers.
Rising Equity Markets
Equity markets heavily influence the value of an insurer's retirement plan assets under administration, which are a significant component from which administrative fee revenues are derived. An improved equity market this year have resulted in increases in the value of the assets under administration in the retirement plans, which has enhanced insurer's ability to earn administrative fee revenues derived from the value of those assets. Further improvement equity market will enhance the profitability of the VA portfolio and earnings from Asset Under Management.
Strong Returns This Year
Investors in life insurers have had a good year. The Dow Jones U.S. Life Insurance Index has risen 57% this year, compared to a 24% increase for the S&P 500. Among the broader finance sector life insurers have also left behind bank as KBW Bank Index has risen 30%.
Three Life Insurers Looking Bright
While many life insurers in the Zacks coverage look attractive, we have picked up three companies based on their valuation and earnings performance. The industry Price/Book ratio is 1.54, P/E ratio 9.07x and ROE is 8%.
StanCorp Financial has delivered a positive earnings surprise of 28.3% over the past four quarters and the stock has jumped 73% year till date. The Zacks Consensus Estimates long term EPS growth of 13.1%.
Prudential hold place among top insurers in U.S. The company has posted strong earnings for all the three quarters of 2013, delivering a positive earnings surprise of 26%. Shares have also surged 60% year to date. The Zacks Consensus Estimates long-term EPS growth of 14.2% The company's high-return Japanese business, a broad asset management business, and a top market position in the nascent large-case pension risk transfer business will drive long term growth.
American Equity Investment has delivered a positive earnings surprise of 24.8% over the past four quarters and the stock is up a whopping 95% year till date. The Zacks Consensus Estimates long term EPS growth of 10.0%.
To Sum Up
A mix of all the factors – improving industry trends, solid earnings performance, attractive valuation – makes these three life insurers ideal to be included in an investment portfolio.
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