Following the market’s big drop last year and bounce so far this year, it’s likely that markets will continue to bounce around as economic data points a mixed picture. That’s a good trading environment—and it can also be a good one for long-term investors.
The way to take advantage is to look for stocks that are cheap, ignored or even hated by the market in general, and capable of moving higher thanks to strong financial performance.
The life insurance industry is cheap right now, as insurance stocks have dropped following the increase in interest rates over the past year. And the market doesn’t see too much upside, which tends to mean there’s a lot, especially as these companies have improved their risk management.
With a number of choices to pick from, Jackson Financial (JXN) looks attractive. Its most recent earnings report showed over $60 per share in earnings, leading to a 0.6 PE ratio. And the stock trades at about one-third of its book value, even while sporting a 39 percent profit margin.
Action to take: Investors can get a growing dividend yield that starts at about 6.7 percent right now. The company should offer slow and steady returns over time, and the possibility of interest rates peaking this year could help fuel a rally in the months ahead.
For traders, shares are in a slow-and-steady uptrend right now, and just gave back a bit of a rally. The June $45 calls, last going for about $0.45, could see high-double-digit returns or better on a continued move higher for the stock.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.