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ChartWatch: A Strong Insurance Stock
2/20/2013 2:23:00 PM
By: Wyatt Investment Research
Homeowners Choice ( HCI ) was quietly one of last year's top performers. Now the stock has pulled back to an important support level, providing another entry to this great company.
As the chart below shows, Homeowners Choice has made quite the
climb. The shares increased from around $8 to as high as $26 in
2012. Based on that price appreciation, investors may have
believed this is a high-flying
growth stock like
Though the shares have had a wild ride, the company is
actually fairly conservative. In fact, keeping risk low is their
business. That's because HCI is an insurance holding company,
providing property and casualty insurance in Florida.
At a $21.25 stock price, the shares trade at only seven times
2013 EPS projections. For perspective, the average P/E ratio in
the industry is 21 while the average price to book is 1.7. HCI's
ratios are 9 and 2, respectively. So the low P/E ratio
compensates investors for the slightly higher book valuation.
Positions held in companies mentioned above:
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