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Long only, contrarian, special situations, value
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The market keeps rallying, and I keep getting more cautious. Most of the new money I am deploying into the market is either going into short positions like LinkedIn (LNKD), underfollowed small caps with rock bottom valuations like Aviat Network (AVNW) and companies with solid fundamentals and good dividend yields. One of the stocks in the latter category that I am looking at is Allstate (ALL).

7 reasons Allstate is a solid buy at $31 a share:

  • The company is rebounding off recent earnings challenges. Allstate is going to earn just $1.32 in FY2011, is scheduled to earn $3.65 in FY2012 and analysts have it making $4.02 a share in FY2013.
  • It has an A- rated balance sheet and yields a solid 2.7%.
  • Allstate has crushed earnings estimates each of the last four quarters and consensus estimates for FY2013 have risen by 4% over the last month.
  • The stock look likes it has bottomed, is showing increasing technical strength and just crossed its 200 day moving average (See Chart)

(Click to enlarge)

  • Allstate sells for less than book value (83%) and is priced at 48% of trailing 12 months revenues.
  • ALL has a low five year projected PEG (.93) for a financial services stock and is selling for less than 8 times operating cash flow
  • The stock sells for less than 8 times forward earnings and insiders have no shares over the previous six months.
Source: Allstate: 7 Reasons To Put Yourself Into Good Hands