Post by
Jonathan9 on Oct 13, 2024 10:22am
Fairfax - 💎 in plain sight
Fairfax is still an undervalued Gem hiding in plain sight. I would argue it has the best earnings prospects compared to competitors over the next 3 years but still trades well below its peers. This presents continued opportunity even after the recent stock performance.
Insurance stocks have been slowly experiencing multiple expansion.
When comparing competitors, they are all trading around 2x Book, P/E > 12 with ROEs in the mid to high teens. Travelers, Chubb, Progressive, WRB, Allstate, Markel, Intact, Definity, and the list goes on with few exceptions.
Fairfax trades at around 1.3x Book, P/E 8. If the market continues to close the gap there is still 40-50% upside.
Earnings growth + share buybacks + multiple expansion
Margin of safety with opportunity for upside.
If the market gradually re-evaluates close to competitors today, you get a stock price over $2500+ CAD per share.
Analogy of a snow ball rolling down hill which is picking up size and speed. Largest growth and reaction still has not been full recognized by the market.