Today’s recommendation was chosen by Sam Subramanian for the strong value that it provides. The shares are currently trading at a 25% discount to their book value, and the company has enjoyed a 50% increase in its EPS over the last year.
Argo Group (AGII)
from AlphaProfit Sector Investors’ Newsletter
Argo Group’s shares are a value play in specialty insurance. In the second quarter, strong underwriting margins and premium growth helped Argo grow EPS 50% from the year-ago period.
The company’s per-share book value has grown at a 9.6% annual rate since 2002. They trade at a 25% discount to book value versus a 10% premium on average for its specialty insurer peers.
Management believes Argo shares are undervalued and has bought back 3% of its shares through June this year. The valuation gap versus peers should narrow if Argo’s efforts to double its return on equity to the high single-digits pay off.
Buy Below $43.25. Sell Above $47.65. Stop Loss: $30.65. Risk Rating: Average.
Sam Subramanian, PhD, AlphaProfit Sector Investors’ Newsletter, www.alphaprofit.com, 281-565-6963, September 2013