2). Markel Corporation (NYSE:MKL) Ventures has grown 51%, 52%, and 54% over the past three fiscal years, and at only $489 million in annual revenues, there is tremendous future growth potential.
So where to invest?
By most measures, American International Group Inc (NYSE:AIG) still looks to be undervalued. Its price-to-book ratio is 0.7, well below that of most of its peers. However, the company must demonstrate sustained ability to write profitable business. So far, the evidence suggests that it will, and that its traditional customer base wasn’t scared away in the same manner investors were. Berkshire, however, is a little tougher to value in terms of upside.
But Buffett himself has given us two helpful pieces of information. First, the company won’t likely grow at the same rate as the past. Second, 1.2 times book is the magic number for the company to buy back shares. Today’s multiple is closer to 1.4, which would indicate that a little patience would net a better entry point. With that said, it could be worth opening at least a small position even at this price to start, and add more shares over time as Mr. Market’s volatility presents better values.
Lastly, Markel Corporation (NYSE:MKL) is a tremendous opportunity to get in on a long-term growth powerhouse. Again, it’s not only unfair, it’s also unreasonable to expect Markel to be the next Berkshire. However, this is still an incredibly well-run company with top management and what appears to be a solid capital allocation strategy, and that’s a great recipe for sustained returns for many years.
These are three solid companies that will all likely perform well for years to come. But if you’re looking to buy just one today, and hold for years, Markel gets the nod in my eyes.
The article A Stalwart, an Upstart, and a Turnaround: Which Stock Should You Buy? originally appeared on Fool.com and is written by Jason Hall.
Jason Hall owns shares of Berkshire Hathaway, American International Group, and Markel. The Motley Fool recommends American International Group, Berkshire Hathaway, and Markel. The Motley Fool owns shares of American International Group, Berkshire Hathaway, and Markel and has the following options: long January 2014 $25 calls on American International Group.
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