Has Fidelity National Financial Inc (FNF) Become the Perfect Stock?

Fidelity National Financial Inc (NYSE:FNF) is a major player in the title insurance business. That business has struggled in recent years as the housing bust took a long time to play itself out. But now, as the housing market has finally seemed to hit bottom, buying activity has started picking up. With title insurance a required component of most mortgage-financed purchases, Fidelity National Financial Inc (NYSE:FNF) rival First American Financial Corp (NYSE:FAF) has seen a dramatic improvement in the company’s fundamentals, and both First American and Fidelity have benefited from the greater transaction-based income that healthy homebuying activity produces.

But at the beginning of the year, Fidelity National Financial Inc (NYSE:FNF) took a turn in a completely different direction, acquiring Digital Insurance. With Digital’s employee-benefits management and health-insurance distribution business serving more than 20,000 small and midsized businesses, Fidelity believes it can unify a fragmented industry. AFLAC Incorporated (NYSE:AFL) has certainly found success in serving business customers with supplemental health insurance, and by focusing on modestly sized businesses with overburdened HR departments, Digital could give Fidelity a whole new profit center for growth.

For Fidelity to keep improving, it needs to maintain its favorable valuation while making the most of the opportunity that Digital represents. If housing keeps soaring, the improvement in its core title business will just be icing on the cake for Fidelity investors.

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The article Has Fidelity National Financial Become the Perfect Stock? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Aflac and First American Financial.

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