Trading at a P/E of just above 9, this annuity company looks like a good value play.
National Western Life Group, Inc. (NWLI)
From Positive Patterns
National Western Life Group, Inc. (NWLI) is a small ($1 B market-cap) life insurance company in Galveston Texas that writes most of its business in the annuity area (85%). The Moody/Dynasty Trust and family own 66% of the stock. The family is going on the fourth generation and keeps a very low profile. They own many different businesses, a Bank, and also control of American National Insurance (ANAT).
The new retirement laws should be good for annuity sales, now allowed in retirement accounts. NWLI is a “bet” on increased annuity sales. The lion’s share of the business is ‘written’ by independent agents’ and NWLI has only around 220 employees in the entire company. They run a lean-ship. This is a financially conservative company (AAA rated/no debt), and we should see some good earnings gains ahead.
It’s a good bargain buy without much downside risk, in fact I would rate NWLI as very low risk here, a cheap stock selling at less than 10 times current earnings, with good upside potential in the next 5 years, and very strong free-cash flow, too.
NWLI is a good buy under $300. If NWLI can break above $320, that would turn the chart pattern positive. And while not a buy/keep stock, this could make for very nice 3-5 year trade for an IRA, as I expect earnings will see a nice jump here.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, December 31, 2019