Don’t ignore the world’s largest insurer
American International Group Inc (NYSE:AIG) is the second most held insurance company in hedge fund investor’s portfolios. Much of this has to do with the fact that the company has a ridiculous amount of assets on its balance sheet, giving investors a humongous margin of safety. The stock has also been able to grow earnings and beat analyst estimates consistently.
Demand for durable goods has been on the rise. More people are buying cars and homes, which means more revenue when you’re an insurance company on the size and scale of American International Group Inc (NYSE:AIG). Analysts on a consensus basis anticipate this company to grow earnings by 12.20% on average over the next 5 years. American International Group Inc (NYSE:AIG) trades at a 11.4 earnings multiple, keeping it cheap relative to future growth.
Ford remains hot
Ford Motor Company (NYSE:F) has done an admirable job of getting itself out of a ditch. The automotive industry has gotten a lot of negative political backlash during the elections. But somehow Ford Motor Company (NYSE:F) has made it out of the recession with a strong balance sheet and without needing to ask the government for a bailout. In addition to that, Ford Motor Company (NYSE:F) has been adding jobs to its production lines in the United States while growing its automotive presence in overseas markets. It also helps that Ford has been able to design more attractive looking cars while cutting down on the number of brands to just Ford and Lincoln.
Ford Motor Company (NYSE:F) offers investors a compelling 2.52% dividend yield while trading at a 10.6 earnings multiple. Analysts on a consensus basis project Ford to grow its earnings by 11.9% on average over the next 5-year.
Conclusion
It is time to buy stock trading at a fairly reasonable valuation, with a healthy balance sheet, along with reasonable rates of projected growth. Selling stocks because of unemployment in Europe is foolish over the long haul. The fundamentals always matter the most.
The article Buy In May and Go Away originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends American International Group (NYSE:AIG), Apple, and Ford. The Motley Fool owns shares of American International Group, Apple, and Ford and has the following options: Long Jan 2014 $25 Calls on American International Group. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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