Nancy Zambell: Insured Potential
12/13/2002 12:00 am EST
Nancy Zambell experienced the recent devastation caused by tornados from her home, in a Midwest community that saw more than 50 houses completely destroyed. Everyone here at the Money Shows extends their best wishes and prayers to Nancy and her community. The editor of UnTapped Opportunities has turned this personal experience into an investment opportunity, as she recommends a regional insurance play.
"Alfa Corp. (ALFA NASDAQ) started its life over 50 years ago by offering fire insurance to Alabama farmers. It has since expanded to more than 400 service centers in Alabama, Mississippi, and Georgia. Its 600+ agents have sold more than $14 billion in insurance policies. Its primary business is personal property and casualty (P&C) lines. In addition to its consumer policy holders, the company has built a name for itself by providing coverage for small businesses. And it has positioned itself as the insurer of choice for service businesses such as maid services, beauty shops, carpenters, and auto garages.
"Alfa continues to excel and was recently named to the list of Forbes' 200 Best Small Companies in America. The company recently received an A+ Superior rating from A.M. Best. In addition, the company also receives S&P's highest rating on its commerical paper, which is an excellent indication of its financial strength. For the first six months of 2002, total revenues rose 8% and income was up 6%. And its results are tracking very well for a nice profit in 2002.
"Insiders have been very busy lately, with 59 of them accumulating the company's shares in the last six months. Yet, the stock is trading very close to its 52-week low. We consider the shares undervalued, trading at almost 40% less than the company's peers. And it's undiscovered. Just a few analysts cover the stock. Buy up to $14 and keep a sell limit of $10 in mind as a stop loss."