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Steve Hach is the Senior Editor at ValuEngine.com, a Newtown, Pennsylvania-based stock valuation and forecast service. ValuEngine utilizes Ivy League financial research as the basis for its coverage of more than 7000 US, Japanese, and Canadian, and other foreign stocks. Hach utilizes... More
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  • Private Mortgage Insurer MGIC Investment Corp (MTG, $MTG) Leads ValuEngine Short-Term Forecast Screen  0 comments
    Feb 17, 2011 12:39 PM | about stocks: MTG
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    February 17, 2010
    ATTENTION Advanced Investors and Finance Professionals:
    If you are reading this you should download ValuEngine Institutional Software to see how VE’s powerful quantitative tools can increase your productivity and effectiveness.

    Seeking Alpha Readers should check out our Seeking Alpha VE Investment App HERE.

    VALUATION WARNING:  Our models find that overvaluation is approaching levels typically seen when a market correction is imminent. Overvalued stocks now make up almost 68% of our universe and almost 35% of the universe is calculated to be overvalued by 20% or more.  ALL sectors are now calculated to be overvalued.

    Paging Houdini

    Private Mortgage Insurer MGIC Investment Corp (MTG, $MTG) Leads Short-Term Forecast Screen

      MGIC Investment Corporation (MTG, $MTG) is a holding company which, through its wholly owned subsidiary, Mortgage Guaranty Insurance Corporation, is the leading provider of private mortgage insurance coverage in the United States to the home mortgage lending industry. Private mortgage insurance covers residential first mortgage loans and expands home ownership opportunities by enabling people to purchase homes with less than 20% down payments. If the home owner defaults, private mortgage insurance reduces and, in some instances, eliminates the loss to the insured institution.

      The company has been battered by the housing crisis and as expected share prices took a real nose-dive during the deflation of the housing bubble.  The company recently announced that it expected to continue to post losses for the foreseeable future and a return to profitability is not expected until 2012.  Shares nose-dived near the end of January on the bad news.  However, shares jumped hard the last two weeks despite the pessimistic outlook.  Our model seems to be influenced by this volatility and in a screen for short-term forecast prospects today MTG topped a list of 47 tickers for short and long-term forecast returns.

      ValuEngine has issued a STRONG BUY recommendation for MGIC Investment Corporation on Feb. 17, 2011. Based on the information we have gathered and our resulting research, we feel that MGIC Investment Corporation has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE market valuation, expected EPS growth and company size.

      Based on available data as of Feb. 17, 2011, we believe that MTG should be trading at $23.02. This makes MTG 57.47% undervalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For MTG, we base this on actual earnings per share (NYSEARCA:EPS) for the previous four quarters of -$2.37, forecasted EPS for the next four quarters of $0.20, and correlations to the 30- year Treasury bond yield of 4.67%.

    Subscribers can check out the latest figures on MGIC Investment Corporation from our models HERE. 

    Seeking Alpha Readers should check out our Seeking Alpha VE Investment App HERE.

     

    Market Indices Data
      Latest Change YTD
    Dow Jones
    12,041.20 1.06 4.01%
    NASDAQ Composite
    2,754.24 3.05 3.82%
    Russell 2000
    798.62 -0.27 1.91%
    S&P 500
    1,304.83 -2.76 3.75%

     

    ValuEngine Market Overview
    Summary of VE Stock Universe
    Stocks Undervalued
    32.4%
    Stocks Overvalued
    67.6%
    Stocks Undervalued by 20%
    14.26%
    Stocks Overvalued by 20%
    34.65%

     

    ValuEngine Sector Overview
    Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
    Oils-Energy 0.97% 2.49% 8.53% 30.00% overvalued 47.22% 43.48
    Basic Materials 0.39% 2.00% 0.39% 21.21% overvalued 66.00% 35.68
    Transportation 1.19% 1.81% 1.12% 17.98% overvalued 36.27% 27.32
    Computer and Technology 0.68% 7.26% 12.13% 17.67% overvalued 45.64% 41.21
    Multi-Sector Conglomerates 0.58% 0.96% 5.19% 17.62% overvalued 39.79% 29.99
    Business Services 0.64% 2.50% 3.63% 16.19% overvalued 23.33% 38.77
    Aerospace -0.02% 0.62% 5.06% 15.86% overvalued 36.18% 19.20
    Industrial Products 0.53% 3.03% 6.16% 14.27% overvalued 35.95% 29.02
    Auto-Tires-Trucks -0.12% 1.05% 1.29% 14.15% overvalued 53.18% 23.16
    Retail-Wholesale 1.11% 5.33% 3.66% 12.79% overvalued 34.40% 28.81
    Finance 0.59% 3.24% 5.16% 11.58% overvalued 22.14% 25.15
    Consumer Discretionary 0.63% 3.89% 4.43% 10.51% overvalued 30.14% 30.56
    Consumer Staples 0.85% 1.14% 0.51% 10.50% overvalued 21.18% 27.56
    Construction 0.76% 1.16% 5.12% 10.49% overvalued 17.79% 46.62
    Utilities 0.35% 0.30% 1.59% 9.02% overvalued 19.39% 26.42
    Medical 0.71% 3.10% 8.67% 1.60% overvalued 20.33% 45.00

     

     

    With Richard Suttmeier's ValuTrader Newsletter Portfolio, you get timely stock picks and a strategy designed to profit from today's volatile market environment.

    Click HERE to Sign Up for Richard Suttmeier's ValuTrader Newsletter Portfolio

     

     

     
     
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    Stocks: MTG
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