At These Prices, It's Time to Go Overweight Quality Financials

 |  Includes: AIZ, DFG, LNC, MET, PFG, PL, PRU, SFG
by: David Merkel, CFA

If Prudential (NYSE:PRU) drops much further, I am buying some. With an estimated 2009 PE below 8, it would be hard to go wrong on such a high quality company. I am also hoping that Assurant (NYSE:AIZ) drops below $53, where I will buy more.

The industry fundamentals are generally favorable. Honestly, I could get juiced about StanCorp (NYSE:SFG) below $50, Principal (NYSE:PFG), Protective (NYSE:PL), Lincoln National (NYSE:LNC), Delphi Financial (NYSE:DFG), MetLife (NYSE:MET).

There are quality companies going on sale, and my only limit is how much I am willing to overweight the industry. Going into the energy wave in 2002, I was quadruple-weight energy. Insurance stocks are 16% of my portfolio now, which is quadruple-weight or so. This is a defensive group, with reasonable upside. I’ll keep you apprised as I make moves here.