For immediate release
Chicago, Illinois – April 7, 2022 – Today Zacks Investment Ideas Presents Highlights iShares US Insurance ETF IAK, Chubb Limited BC and The progressive society. PGR.
Insurance giants send strong ‘buy’ signal
After a strong finish in March, the bears are back to kick off the seasonal April. A near-record intra-month rise of over 16% on the Nasdaq has started to fade, with the tech-heavy index now down -2.5% to start this holiday-heavy month. The yo-yo market plays with investors’ emotions, from hope to fear and back, with the VIX index serving as a representation of these emotions. The widely tracked Fear Gauge has come back to life, rising more than 17% in the past few days alone.
Minutes from the Federal Reserve’s March policy meeting are due out at 2 p.m. ET today and could contribute to volatility. The recent hawkish tone as well as policymakers’ expectations for future interest rate hikes have once again dampened investor confidence.
Fed Chairman Jerome Powell said at his recent press conference that the minutes will outline the parameters for balance sheet tightening as the Fed unwinds trillions of dollars in asset purchases made during the pandemic. The yield on 10-year Treasury bonds hit 2.64% this morning, its highest level in more than three years.
One way to avoid recent volatility is to target pockets of the market that are outperforming and showing some immunity to bearish moves. The iShares US Insurance ETF fits the bill, as the group has hit consistently higher highs this year as the market has rallied. While the iShares US Insurance ETF may underperform during bullish periods, these companies tend to outperform during defensive periods. like the environment in which we found ourselves this year. Today’s price action is a great example of this, as the major indices are down substantially while IAK is strongly in the green.
Let’s take a look at the top two individual stocks in the IAK ETF which make up over 20% of the fund’s holdings. Both companies are part of the Zacks Insurance – P&C industry group, which currently ranks in the top 33% out of approximately 250 industries. Targeting individual stocks within the major industry groups provides a constant “tailwind” to our investment success.
Chubb Limited is a property and casualty insurance company. It offers a multitude of services, including commercial and personal property and casualty insurance, accident and supplementary health insurance, reinsurance and life insurance. CB markets its products primarily through insurance and reinsurance brokers. Chubb Limited was incorporated in 1985 and is based in Zurich, Switzerland.
CB has built an impressive track record of earnings surprises, missing just one quarterly estimate in the past five years. In February, the insurance company reported fourth-quarter EPS of $3.81, a surprise of +16.51% from the consensus of $3.27. CB posted a four-quarter average earnings surprise of +12.03%, contributing to the stock’s 35.5% return over the past year.
Analysts are bullish on CB and raised their first-quarter estimates by +1.41% last week. The Zacks consensus estimate now stands at $3.60, which would translate to growth of 42.86% from the same quarter last year. CB is expected to release its quarterly results on April 26and.
The progressive society.
The Progressive Corporation is an insurance holding company that provides personal and commercial property and casualty insurance and other specialty insurance services primarily in the United States. PGR offers automobile, property, general liability and other insurance products through its subsidiaries.
The company sells its products through independent insurance agencies as well as directly to the consumer. The Progressive Corporation was founded in 1937 and is headquartered in Mayfield, OH.
PGR has only missed earnings estimates three times in the past three years. The insurance company recently reported fourth quarter EPS of $1.05, beating consensus of $0.99 by +6.06%. The stock reacted favorably and is up nearly 14% this year alone.
What Zacks’ model reveals
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently experienced positive earnings estimate revision activity. This more recent information can be a better predictor of future earnings and can give investors a head start during earnings season. The technique has proven to be very useful in finding positive profit surprises. In fact, combining a Zacks No. 3 or higher ranking with a positive earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.
PGR is a Zacks Rank #3 (Hold) and has a +0.21% Earnings ESP. Another beat could be expected when the company releases first quarter results on April 21.st.
Analysts covering PGR expect progress to continue this year, with Zacks’ 2022 consensus EPS estimate predicting a growth rate of 9.98% to $4.85 per share.
Keep an eye on these two insurance giants as they look set to continue their outperformance.
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