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  • Winners & Losers: Aluminum, CENX, Life Insurance, DFG, and PLFE 0 comments
    Aug 19, 2009 12:37 PM | about stocks: DFG, PLFE, CENX
    Aluminum stocks like Century Aluminum and insurer stocks Delphi Financial and Presidential Life were today's biggest small cap movers

    Not that one day makes or breaks a trend, but today's best and worst small caps stocks (and industries) may be a clue of a bigger them at work..... and therefore could affect trades. In any case, the S&P 600 Small Cap Aluminum Index was led higher by 7.3% today on the shoulders of Century Aluminum Co. (NASDAQ:CENX). Conversely, the S&P 600 Life and Health Insurance Index was dragged lower by Delphi Financial Group Inc. (NYSE:DFG) and Presidential Life Corp. (NASDAQ:PLFE). Here's what you need to know about each.

    Aluminum

    The S&P 600 Small Cap Aluminum Index is a one stock index... Century Aluminum Co. (CENX). So, it's just as easy to look directly at CENX rather than the index

    Though our preference for other aluminum stocks has been pretty clear (we favored Kaiser and Alcoa over Century, per our July 27 commentary), the market continues to be optimistic on CENX.

    Here's the quirk.... Century didn't post any news today - the stock just jumped on its own. The assumption is that the commodities rally prompted by Monday's market decimation still had a little momentum on Tuesday. It's possible, but a stretch in our view. More likely, the strength from these names continues to be fueled by assumptions of a bigger economic recovery. That just so happens to include Century Aluminum Co.


     

    Given the dismal expectations for Century, it continues to be our least favorite name in a group we're otherwise bullish on.

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    Life Insurance

    The S&P 600 Small Cap Life and Health Insurance Index closed 9.2% lower today, but investors should note it was the 'life' side of the equation causing more problems than the 'health' side. (In fact, some of the health insurance stocks look, well, healthy.) Small cap life insurers Delphi Financial Group Inc. (DFG) and Presidential Life Corp. (PLFE) were the key culprits, losing 10.2% and 4.3% respectively.

    Presidential Life didn't do anything to deserve the drubbing - it was just guilty by association. Competitor/peer Delphi Financial took a rough hit on news that the insurer was offering 3 million shares at $21 per share - more than a little under where shares had been priced prior to the news. The market brought all the new ones and the 50 million issued and outstanding shares to parity today though.

    Though the odds are decent that DFG will get a little relief later this week, it should be noted that the entire life (and some health) insurer group was already looking a little peaked in the short run. There's no sense in fighting the chart.



    Bigger picture, with Presidential Life's projected P/E of 9.91 and Delphi Financial's projected P/E of 5.7, it's hard to not be interested once any dip plays out.

    If you'd like to know of any changes in our opinion of these stocks (or if we officially recommend them as trades), be sure to sign up for free newsletter today. It's delivered 2 to 3 times per week.
    Stocks: DFG, PLFE, CENX
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