New Trade for August 14th, 2023

Given the recent volatility stemming from bank closures, the financial sector can make an attractive environment to hunt for stocks trading at extremely attractive valuations. And while the rapid rise in interest rates has proved challenging to some banks, there are also segments of the financial sector that benefit from higher rates. Today’s trade features an undeniable value from the financial sector set to benefit in the current environment.

Chubb Limited (CB) 

One area of the financial sector set to benefit from higher rates is the insurance industry, where companies generally invest the premiums they receive in fixed-income instruments. Insurers such as Chubb Limited collect premiums from policyholders typically at the start of a contract period and can now invest that money at much higher rates. 

With a market capitalization of $79.6 billion, Chubb is one of the world’s largest property and casualty (P&C) insurance providers and the largest publicly traded P&C insurer. The more than 140-year-old insurer is recognized for having a solid brand name, outstanding customer service, and careful management of its liabilities over the years.

Chubb stock has declined 13% YTD and currently trades at an attractive 10.8 time 12-month forward earnings, well below the industry average of 14.8 times 12-month forward earnings. The analysts offering recommendations say to Buy CB stock. A median 12-month price target of 244.00 represents a +26.96% increase from the current price.

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