Stocks & Investing
Stocks and Investing
Stocks and Investing
Mon, March 14, 2011 ael, cia, sfg, uam, spwra, rsol, Life Insurance Stocks 19.37% overvalued
March 14, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Life Insurance sector and these stocks are the most undervalued as of today. AMERICAN EQUITY INVT LIFE HL (NYSE:ael), CITIZENS INC (NYSE:cia), STANCORP FINANCIAL GROUP (NYSE:sfg), UNIVERSAL AMERICAN CORP (NYSE:uam), SUNPOWER CORP-CLASS A (NASDAQ:spwra), REAL GOODS SOLAR INC-CLASS A (NASDAQ:rsol) are all expected to go Down as they are overvalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.
The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:
Symbol Company Name Last Close Fair Value Valuation Industry
ael AMERICAN EQUITY INVT LIFE HL 12.98 10.87 19.37% overvalued Life Insurance
cia CITIZENS INC 7.21 6.6 9.20% overvalued Life Insurance
sfg STANCORP FINANCIAL GROUP 45.57 42.5 7.23% overvalued Life Insurance
uam UNIVERSAL AMERICAN CORP 20.96 13.99 49.79% overvalued Life Insurance
spwra SUNPOWER CORP-CLASS A 14.27 36.42 60.82% undervalued Solar Energy
rsol REAL GOODS SOLAR INC-CLASS A 2.48 3.06 18.98% undervalued Solar Energy
Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.
Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.
AMERICAN EQUITY INVT LIFE HL (NYSE:ael) - American Equity Investment Life Holding Company, through its subsidiaries, provides annuities and life insurance products in the United States and the District of Columbia. The company underwrites annuity and insurance products, as well as collects renewal premiums on certain accident and health insurance policies. Its annuity products include fixed index annuities and fixed rate annuities, as well as single premium immediate annuities. The companys insurance products comprise traditional ordinary and term, universal life, and other interest-sensitive life insurance products. It markets its products through a brokerage distribution network of approximately 50 national marketing organizations and approximately 41,000 independent agents. The company was founded in 1995 and is based in West Des Moines, Iowa.
CITIZENS INC (NYSE:cia) - Citizens, Inc. and its subsidiaries provide life and health insurance products and services in the United States and internationally. Its Life Insurance segment engages in issuing ordinary whole life insurance products to foreign residents, high net worth and high income residents, and middle income households. This segment offers its products through independent marketing firms and consultants in Latin America and the Pacific Rim. The companys Home Service Insurance segment focuses on the life insurance needs of the middle to lower income market in Louisiana, Mississippi, and Arkansas. This segment sells ordinary whole life products to provide funding individuals final expenses, primarily consisting of funeral and other burial costs, as well as offers limited liability, named peril property policies covering dwellings and contents. Home Service Insurance segment provides policies and services through home service marketing distribution system agents, who sell policies, collect premiums, and service policyholders. The company was founded in 1969 and is based in Austin, Texas.
STANCORP FINANCIAL GROUP (NYSE:sfg) - StanCorp Financial Group, Inc., through its subsidiaries, provides group insurance products and services in the United States. The company operates in two segments, Insurance Services and Asset Management. The Insurance Services segment offers group and individual disability, group life, accidental death and dismemberment, and group dental and vision insurance products, as well as absence management services to individuals and employer groups. Its Asset Management segment provides 401(K) plans, 403(b) plans, 457 plans, defined benefit plans, money purchase pension plans, profit sharing plans, and non-qualified deferred compensation products and services through an affiliated broker-dealer. This segment also offers investment management and advisory services, financial planning services, commercial mortgage loan origination and servicing, individual fixed-rate annuity products, group annuity contracts, and retirement plan trust products. The company sells its products through master general agents, brokers, consultants, and financial institutions primarily to physicians, lawyers, executives, employer groups, professionals, small business owners, and individuals. StanCorp Financial Group was founded in 1998 and is headquartered in Portland, Oregon.
UNIVERSAL AMERICAN CORP (NYSE:uam) - Universal American Corp., together with its subsidiaries, provides health insurance and managed care products and services primarily to the senior population in the United States. It operates in four segments: Senior Managed CareMedicare Advantage, Medicare Part D, Traditional Insurance, and Senior Administrative Services. The Senior Managed CareMedicare Advantage segment offers private fee-for-service plans; coordinated care plans; and preferred provider organization plans, which provide healthcare benefits and Medicare covered benefits, as well as additional supplemental benefits, including a defined prescription drug benefit. The Medicare Part D segment offers prescription drug coverage as a benefit to Medicare-eligible beneficiaries, known as Part D benefits under contracts with the Center for Medicare and Medicaid Services. The Traditional Insurance segment offers Medicare supplement business; specialty health insurance products, primarily fixed benefit accident and sickness disability insurance to the middle income self-employed market; and senior life insurance products. The Senior Administrative Services segment provides outsourcing services to affiliated insurance companies, as well as unaffiliated companies that support insurance and non-insurance products, primarily for the senior market. Universal American Corp. distributes its products through an independent general agency system and a career agency system. The company was founded in 1981 and is headquartered in Rye Brook, New York.
SUNPOWER CORP-CLASS A (NASDAQ:spwra) - SunPower Corporation, together with its subsidiaries, designs, manufactures, and markets solar electric power technologies. The company operates in two segments, Components and Systems. The Components segment manufactures and sells solar power products, including solar panels and inverters, which convert sunlight to electricity compatible with the utility network. This segment sells solar components for use in residential and commercial applications to installers and resellers, including its third-party global dealer network. Its products are also used in multi-MWac solar power plant applications. The Systems segment sells solar power systems directly to system owners and developers. Its services include development, engineering, procurement, permitting, construction, financing options, monitoring, and maintenance. This segment principally offers PowerGuard roof system, a roof-mounted solar panel mounting system; SunPower T-10 commercial solar roof tiles, which are pre-engineered solar panels; SunPower T-5 solar roof tile system that combines solar panel, frame, and mounting system into a single pre-engineered unit; SunTile roof integrated system for residential market; ground mounted SunPower Tracker systems; and fixed tilt and SunPower Tracker systems for parking structures. Its customers include commercial and governmental entities, investors, electric utilities, independent power producers, production home builders, and homeowners worldwide. SunPower Corporation has a joint venture with AU Optronics Corp. to construct and operate a solar cell manufacturing facility in Malaysia. The company was incorporated in 1985 and is headquartered in San Jose, California. SunPower Corporation operates independently of Cypress Semiconductor Corporation, as of September 22, 2008.
REAL GOODS SOLAR INC-CLASS A (NASDAQ:rsol) - Real Goods Solar, Inc. operates as a residential and commercial solar energy integrator in California and Colorado. The company offers various turnkey services, including design, procurement, permitting, build-out, grid connection, financing referrals, and warranty. It installs residential and small commercial solar energy systems that are between 3 kilowatts and 250 kilowatts output, as well as larger commercial projects of up to 5MW output. The company was founded in 1978 and is based in Louisville, Colorado. Real Goods Solar, Inc. is a subsidiary of Gaiam, Inc.
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