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It's time to look at insurance |
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companies with possible privatization. |
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Released on Saturday, September 10, 2011, 3:00 PM ET
Pittsburgh, PA (SpeculatingStocks) - The week came to a close with a dreadful look on the stock market’s face, bloody heat maps, and the only cheery green happened to be in the short-leverage sectors. With the world financial markets in a state of uncertainty and President Obama asking Congress to pass a $ 447 Billion jobs and stimulus bill, you may be questioning where to put your money.
Taking a closer look at President Obama’s overall plan, which coincides with the opinion of Gov. Perry of Texas—a Republican hopeful for the upcoming election—Mr. Obama would like to reduce “long-term debt with both changes in entitlement programs and taxes from the wealthy”, as reported on the front cover of the The New York Times.
According to The Wall Street Journal, Mr. Obama has asked, or rather demanded, that Congress immediately pass his proposed jobs bill which would extend and even broaden the scope of the Bush era payroll tax cuts. Employees can expect to receive an increase from the 2% reduction, while employers can look forward to 100% expensing for new investments.
But where should you stick these new investments? If the government isn’t decreasing spending, nor increasing taxes, then it has to cut back somewhere else in its budget. As Mr. Obama would have it, in the Medicaid and Medicare programs—as Social Security is suspected to be too popular to directly phase out.
With Medicaid and Medicare possibly going to the wayside, privatization must fill the gap. That means insurance—health, disability, and long-term care for the older generations to fulfill those ever increasing medical expenses. So why not put that money into stock-owned insurance companies?
Eastern Insurance Holdings, Inc. (NASDAQ: EIHI), is trading at around $13.16 a share (4:00 PM EDT). It has a relatively small market cap of $106.99 Million. EIHI has paid a dividend quarterly since 2007, and recently has been stable at $0.07 a share. Eastern Insurance Holdings, Inc. holds roughly $ 337 Million in assets with a total debt to total asset of 1.63. EIHI also reported an EPS of 0.25 last quarter.
If you would rather go with a larger company MetLife, Inc. is trading near its 52-week low of $28.84 per share, and is currently at $29.88 per share (6:13 PM EDT). MetLife, Inc. pays an annual dividend of about $0.74 per share with an EPS of 2.29. MET is substantially stronger with a total debt to assets of 7.98.
Other strong companies include Lincoln National Corporation (NYSE: LNC), Prudential Financial, Inc. (NYSE: PRU), and Hartford (NYSE: HIG). HIG was $16.64 per share and PRU was $46.14 per share at the market’s close. LNC is currently trading at $18.03 per share (4:00 PM EDT), and has been trended down; now could be the time to buy low and take a possible gain in the future.
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