Analysts expect this conglomerate to grow by more than 26% this year.
Loews Corporation (L)
From Internet Wealth Builder
Loews Corporation (L) owns 90% of insurer CNA Financial, 53% of driller Diamond Offshore, 51% of pipeline company Boardwalk Pipeline Partners, and 100% of rigid plastic container manufacturer Consolidated Container Corporation (CCC), which it bought for $1.2 billion last year, as well as 100% of the eponymous Loews’ Hotels.
Loews is up approximately 10% over the last year on rising bond yields helping its CNA business and higher oil prices. It sells at a large discount (30%) to its tangible book value.
Recent developments at Loews include a 75% increase in net income for 2017 to $1.16 billion ($3.45 per share) from $654 million ($1.93 per share) in 2016. While helped by a $200 million ($0.59 per share) benefit from the tax reduction bill, earnings still increased almost 50% to $964 million ($2.86 per share), boosted by better insurance underwriting and lower losses from asbestos liabilities for CNA. Also contributing were lower write-downs from Diamond Offshore and slightly lower earnings from Boardwalk on the sale of a processing plant. Loews Hotels benefited from better occupancy rates.
Book value, which, as with Berkshire Hathaway, is regarded as the most useful guide to performance at Loews, rose 6% to $57.91, meaning Loews sells at substantial discount to the sum of its parts.
While Loews continues to only pay a nominal $0.25 a year, equivalent of 0.5% yield, it repurchased 4.8 million shares in 2017 at a cost of $237 million and another 4.3 million in January and February at a cost of $217 million.
The stock, which has been largely flat over the last few years, remains attractively valued and the company is taking action to realize its underlying values. Buy.
Gavin Graham, in Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, April 16, 2018