TravelCenters Of America, Ashland, StanCorp Financial Group, Prudential
Financial and American Equity Investment Life Holding highlighted as Zacks
Bull and Bear of the Day
CHICAGO, Dec. 19, 2013
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:
Bull of the Day:
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
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
Bear of the Day:
Ashland (NYSE:ASH-Free Report) slipped from a Zacks Rank #3 (Hold) to a Zacks
Rank #5 (Strong Sell) back on November 8. It has not seen any increases and is
now the Bear of the Day
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 Group Inc. (NYSE:SFG-Free Report) Zacks Rank #1 (Strong
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 Financial Inc. (NYSE:PRU-Free Report), Zacks Rank: 2 (Buy)
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 Life Holding Co. (NYSE:AEL-Free Report) Zacks
Rank: 2 (Buy)
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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