Today’s new Daily Alert recommendation comes from Ford Equity Research.
“Stewart Information Services Corp. (STC, $28) is engaged in global title insurance and real estate services. The company provides these services to homebuyers and sellers; residential and commercial real estate personnel; mortgage lenders and servicers; title agencies and real estate attorneys; home builders; and U.S. and foreign governments. ... We project that STC will strongly outperform the market over the next six to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation and recent price movement. ...
“Earnings strength is very positive. Analyst forecasts have recently been raised. The company recently reported better than expected results. ... Ford’s earnings momentum measures the acceleration or deceleration in trailing 12 month operating earnings per share growth. The upward curvature of the plotted points in the graph below indicates that while Stewart Information Services Corp.’s earnings have increased from $0.21 to an estimated $2.69 over the past five quarters, they have shown strong acceleration in quarterly growth rates when adjusted for the volatility of earnings. This indicates an improvement in future earnings growth may occur.
“Relative valuation is very positive. Stewart’s operating earnings yield of 9.9% ranks above 87% of the other companies in the Ford universe of stocks, indicating that it is undervalued. [Finally,] price movement is very positive. Stewart’s stock price is up 158.8% in the last 12 months, [which is] very positive. This historical performance should lead to above-average price performance in the next one to three months.”
- Richard Segarra, CFA, Ford Equity Research Report, November 30, 2012