American Physicians Services: Undervalued Relative to Peers, Growth Prospects

| About: American Physicians (AMPH-OLD) likes American Physicians Services Group (AMPH-OLD) based on their earnings growth, low valuation, strong analyst support, and recent price momentum. AMPH earnings growth over the past 12 months has been astronomical at 358%, and that is better than virtually all of their industry competitors.

While it is true that a major acquisition last year accounted for much of that extreme growth, even after normalizing, we think earnings have grown around 40% which is still better the majority of their industry competitors. With a PE ratio around 6 (one of the lowest in the industry), we think the stock is still undervalued relative to peers and its growth prospects.

In addition, AMPH has demonstrated a strong track record in exceeding earnings estimates over the past few quarters. AMPH has very good support from analysts, with a consensus rank of 2.5, which represents an overall rating reported to be better than 84% of the entire stock universe.

The stock has demonstrated strong price momentum after moving up steadily over the past twelve months. We do appreciate the downside risk given the recent volatility in the Financial Services sector, which potentially could drag AMPH down.

However, AMPH has only a small portion of their investment portfolio in subprime mortgage backed securities and hopefully should be able to avoid the write downs that have plagued many in the financial services industry.

We purchased this stock for both our Growth and Retirement Portfolios.

Disclosure: is long AMPH