QBE Insurance shares: long-term buy?
I believe that outside the resources/mining sector, QBE Insurance Group Ltd (QBE) is one of the best value shares in the Australian sharemarket, at the moment.
It is a high-quality stock and is mildly underpriced (not bargain priced), therefore, I sustain that their price will continue to increase due to the constant demand in the insurance field.
With more than 120 successful acquisitions in the past decades, this group is growing solidly. Besides the world’s climate changes, floods, bush fires etc are concerns that makes insurance not being an option anymore.
In 2001, Harry Hindsight alerted on QBE’s absolute low price shares. Only $4.90 a share. By February 2007 half of the lot he previously bought was sold by $30.75. A stunning 579.69% of price return.
I have to agree that after this enormous valuation, a price correction was necessary. Between 2007 and 2009 a lot happened in the financial sector, however, QBE still one of the best performance shares in the ASX today.
In spite the fact that QBE is a profitable exporter of financial services with a major exposure to the US and with 70% of their holdings in that country, a USD depreciation would be a negative point for QBE.
The deal is, get the right price and the momentum, not taking too much risk. If you own an insurance company for a long period of time, you might come across a couple of major losses (like 9/11), but a good insurer with a good management can surely succeed.
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