As the philosopher Heraclitus put it 1500 years ago, “The only constant in life is change.” The world is changing because people are changing, and the stock market itself is changing as a result.
There is one constant within the chaos, though. That is, a bargain is always worth a closer look from investors aiming to get the most risk-adjusted bang for their buck. And right these are particularly undervalued value names…
Investors’ money is in good hands with Allstate
Trailing price-to-earnings (P/E): 7.7
Forward-looking P/E: 8.9
Dividend yield: 2%
When COVID-19 first took hold in the United States last February, investors were rightfully concerned that it might take a toll on Allstate’s top and bottom lines. Not only would the insurer’s life and business-continuity payouts likely ramp up, the pandemic would make it tough for the company to sell new plans. In the second quarter of the year, Allstate even refunded $738 million (in the form of a credit toward future premiums) to its automobile insurance customers, since lockdowns meant they weren’t driving as much. From February’s peak to March’s trough the stock lost 45% of its value, and unlike so many other stocks, this one’s yet to reclaim February’s price levels.
As we look back at the insurer’s results through the first three quarters of 2020, though, it becomes clear the market may have overreacted.
For the nine-month stretch ending in September, revenue is only down 1.3%, and adjusted net income is actually up by about 2%. The contagion appears to have actually prompted a bit of new business, though the company’s “Transformative Growth” initiative that was already in place by the time the pandemic took shape meant Allstate was ready enough to do something constructive — and profitable — with this fresh interest.
The market still doesn’t seem to be giving the company full credit for its surprising resiliency.
AbbVie is going to be fine without Humira
Trailing P/E: 23.1
Forward-looking P/E: 8.8
Dividend yield: 4.9%
Drugmaker AbbVie is a tough name to handicap. Its Humira isn’t just an effective treatment for arthritis, plaque psoriasis, and a handful of gastrointestinal ailments. It’s also one of the world’s best-selling drugs, accounting for $19.6 billion worth of 2019’s top line of $33.3 billion.
Full story on Fool.com