Stocks fell in early trading, giving back some of the gains of the past three days as investors processed Fed policy changes. Yesterday, at the conclusion of the 2-day FOMC meeting, the central bank lifted its core interest rate by 0.5%. It’s the second such hike in two months — part of the central bank’s effort to cool down the economy by making it more expensive to borrow money.
One of the single best ways to hedge against rising interest rates is through insurance companies. The reason being that insurance companies invest heavily into fixed-income assets like corporate and government bonds. As interest rates rise, insurers earn a higher yield, and profits grow. Today we’re shining the spotlight on one of the most attractive names in insurance right now.
After more than a decade of a zero-interest-rate environment, things are finally set to improve for the insurance industry, and American International Group (AIG) is one of the well-positioned companies in the industry.
Making the stock even more attractive – it seems like a bargain at current levels compared to peers. AIG is currently trading at less than 6 times forward earnings, cheap compared to top competitor Cigna Corp. (CI), which trades at more than 17 times forward earnings. Further, the company’s price to book ratio of 0.74 is attractive compared to the insurance industry, where the average price to book ratio is more than twice that at 1.65.
The 13 analysts offering a 12-month price forecast for AIG have a median target of $70, representing a 9.5% increase from Wednesday’s closing price. The stock comes along with a 2% dividend backed by a sustainable 12% payout ratio.
Should you invest in AIG right now?
Before you consider buying AIG, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not AIG.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
Click here to watch his presentation, and decide for yourself...
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Click here to find out the name and ticker of Keith's #1 pick...
