The market keeps rallying, and I keep getting more cautious. Most of the new money I am deploying into the market is either going into short positions like LinkedIn (LNKD), underfollowed small caps with rock bottom valuations like Aviat Network (NASDAQ:AVNW) and companies with solid fundamentals and good dividend yields. One of the stocks in the latter category that I am looking at is Allstate (NYSE:ALL).
7 reasons Allstate is a solid buy at $31 a share:
- The company is rebounding off recent earnings challenges. Allstate is going to earn just $1.32 in FY2011, is scheduled to earn $3.65 in FY2012 and analysts have it making $4.02 a share in FY2013.
- It has an A- rated balance sheet and yields a solid 2.7%.
- Allstate has crushed earnings estimates each of the last four quarters and consensus estimates for FY2013 have risen by 4% over the last month.
- The stock look likes it has bottomed, is showing increasing technical strength and just crossed its 200 day moving average (See Chart)
- Allstate sells for less than book value (83%) and is priced at 48% of trailing 12 months revenues.
- ALL has a low five year projected PEG (.93) for a financial services stock and is selling for less than 8 times operating cash flow
- The stock sells for less than 8 times forward earnings and insiders have no shares over the previous six months.