On Mondays I will give my Market advice for those with enough nerve to invest at a time like this, one where anything is liable to happen. I will be maintaining a virtual portfolio to track performance of the advice and report on the performance of this portfolio. This week’s Market Mondays features Aflac, Inc as the stock pick of the week. Also included is an in-depth analysis of Aflac’s quarterly income statement, balance sheet, and statement of cash flows for the past four quarters as well as my forecast for the next two quarters. Since Aflac has an earnings call for this most recent quarter’s earnings on Friday, October 24th, you can check on the accuracy of the first quarter I forecasted within a few days time.
Aflac, Inc (AFL NYSE) is an insurance provider of almost any type of insurance you can think of offhand for both businesses and individuals. Licensed agents and other insurance companies such as AIG, CIGNA, Allstate, ING, among others. This stock is in the financial sector that has been in so much trouble lately, causing the economic uncertainty and much of the stock market plunge. However, Aflac is one of the few companies in their sector that is financially strong and has a concrete expansion plan in Japan which has been positively contributing to their business.
My only fear with Aflac is that it may already be too late to jump on the bandwagon. Like many of its market brethren, Aflac has suffered serious per share losses over the past several weeks. Aflac dropped from $64.25 on September 18, 2008 to $39.50 on October 17, 2008 before settling to the Friday October 18th closing price of $43.14. This stock, like many others in the market right now who are not directly impacted with the banking and credit crisis and are therefore financially healthy, is under-valued at the per share level. This stock is very worth the current share price because within twelve months this stock will be back in the $60 to $65 per share range.
Source: Yahoo! Finance
Aflac has experienced strong revenue growth and made good decisions with their cash. Through management of long term debt and use of cash to buy back stock, Aflac has managed to increase earnings per share and pay solid cash dividends to shareholders. When the market begins to bounce back, and bounce back it will, especially if we get our confidence back and make informed investment decisions, a company with sound a financial position, solid business model, and continuing growth potential will experience large gains. Aflac is one of these companies, poised to produce huge profits for those saavy enough to get in while the price is right.
2 Comments
Aflac gives you cash, which is just as good as money.
That was a pretty significant drop in Aflec stock. It would make me weary of the selection. I’m more impressed by Mentor Capital. They have a better stock price currently $2.65, and they are associated with a product that is a much more immediate and emotional than insurance. Mentor Capital has a 20% stake in a biotech company seeking to market their immunotherapy treatment for breast cancer. The company is currently in the clinical stage and once that is successful stock price gains are possible for shareholders of Mentor Capital.
3 Trackbacks
[...] the performance of the Market Mondays virtual portfolio has yielded a positive return to date. Aflac (AFL) and Datascope (DSCP) have returns of 5.94% and 5.81% respectively. The portfolio value has [...]
[...] Aflac (AFL) incurred losses this week dropping to $43.56 per share at opening this morning. That is a -4.42% return to date. Datascope (DSCP) continues to provide a positive return with the per share price of $51.51 at open this morning. AIG Retirement I Government Securities (VCGSX) increased NAV from $10.73 to $10.78 resulting in a NAV increase of $0.05. The virtual portfolio has a blended return of 1.0% due mostly in part to the losses incurred this week by Aflac. Next week’s Market Mondays will feature a downloadable Excel spreadsheet tool to analyze and track the performance of your portfolio. addthis_url = ‘http%3A%2F%2Fwww.babeled.com%2F2008%2F11%2F17%2Fmarket-mondays-mutual-fund-pick-of-the-week-james-market-neutral%2F’; addthis_title = ‘Market+Mondays+Mutual+Fund+Pick+of+the+Week%3A+James+Market+Neutral’; addthis_pub = ”; [...]
[...] Aflac (AFL) has hurt the Market Mondays virtual portfolio value big time. This past week Aflac experienced large per share price drops (10.43% down from purchase price), along with the broader market, to erase the positive returns generated by the other three investments in the portfolio. Datascope (DSCP) has lost some ground from last week, but is still positive over the purchase price with a 2.96% return to date. AIG Retirement I Government Securities (VCGSX) has continued to do well with an increase in NAV of 1.25%. The most recent addiition to the virtual portfolio, James Market Neutral (JAMNX), has also provided a positive return of 1.03%. addthis_url = ‘http%3A%2F%2Fwww.babeled.com%2F2008%2F11%2F24%2Fmarket-mondays-tracking-your-portfolios-performance%2F’; addthis_title = ‘Market+Mondays+Tracking+Your+Portfolio%26%238217%3Bs+Performance’; addthis_pub = ”; [...]