The market has hit rocky times over the last two months. This has left many equities much cheaper than they were in March. For intrepid investors who had the foresight to keep dry powder at hand, it is time to slowly go bargain hunting. One high risk/high reward equity has pulled back some 40% to $5 a share over the last few months. Given its low valuation and recent insider buying, I think Genworth Financial (GNW) should be looked at by speculative investors looking to pick up its shares on the cheap.
"Genworth Financial provides insurance, wealth management, investment, and financial solutions in the United States and internationally." (Business description from Yahoo Finance)
Five reasons to pick up Genworth Financial at $5 a share:
- Seven insiders stepped up to buy approximately $500k in new shares in May.
- The stock is selling at the bottom of its five year valuation range based on P/B, P/S and P/CF.
- The company's earnings growth is projected to rise sharply in the last two years. Genworth made 43 cents in FY2011. Analysts expect earnings to rise impressively to 80 cents a share in FY2012 and then to $1.46 a share in Fy2013.
- The stock is very cheap at 3.5 times forward earnings, 17% of book value, and 25% of revenues. The median analysts' price target on the stock is $8.50 by the eight analysts that cover the stock.
- The stock has technical support at these price levels (See Chart)
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GNW over the next 72 hours.