Is The Allstate Corporation (ALL) the Most Undervalued Large Cap Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where The Allstate Corporation (NYSE:ALL) stands against other most undervalued large cap stocks to buy now.
On March 4, David Katz, Chief Investment Officer at Matrix Asset Advisors, joined 'The Exchange' on CNBC to share his perspective on the current state of the bull market and what February's mixed action and sector rotation might signal for the rest of the year. Katz acknowledged that while people might not want to hear it, the volatility seen in February is likely to persist throughout the year, with both upside and downside movements. He emphasized that this creates opportunities for investors but also necessitates caution. Katz highlighted several positive factors supporting the market, which included a strong economy and solid corporate performance. However, he expressed concerns about certain policies from the administration, such as tariffs, immigration, and the relationship with the Fed. While these issues have been largely ignored by the market so far, Katz warned that they could eventually lead to a 3-5% correction. Despite this, he remained optimistic about the economy's ability to navigate these challenges and recommended buying into market dips rather than chasing rallies.
To support his sentiment, Katz pointed to companies that have already experienced significant corrections and are positioned to perform well regardless of broader market movements. He highlighted their strong fundamentals, attractive valuations (most trading at under 13-14 times earnings), and good outlooks. He also noted that last year's market leaders have slowed significantly, while sectors that underperformed are beginning to show meaningful improvement, a trend he expects to continue. This sector rotation suggests that investors should be prepared to adapt their strategies as different sectors gain momentum throughout the year.
We used the Finviz stock screener to compile a list of the top stocks trading between $10 billion and $200 billion. We then selected stocks with a forward P/E ratio under 15 and made a list of 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey's database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A financial advisor giving advice to a couple, illustrating the personal finance and insurance products the company offers.
Forward Price-to-Earnings Ratio as of March 4: 11.4
Number of Hedge Fund Holders: 71
The Allstate Corporation. (NYSE:ALL) is a US and Canadian insurance provider. It delivers a range of property and casualty, health, and protection products (which includes auto, home, life, and supplemental) insurance. It also provides consumer protection plans, roadside assistance, and analytics solutions. These are distributed through agents, online platforms, and various partnerships.
The company's Protection Plans segment offers protection for consumer electronics and appliances. The segment saw policy growth in 2024 and now covers ~160 million policies, which is up by 60 million since 2019. This refers to an increase in the number of active insurance contracts the company holds. In Q4 2024, revenues for this segment reached $528 million, which was a 20.3% increase year-over-year. It hit a revenue of ~$2 billion in the full year 2024, which shows a 23.9% CAGR since 2019. This was driven by both domestic and international growth.
The Allstate Corporation (NYSE:ALL) is actively investing in Protection Plans, which is highlighted by the acquisition of Kingfisher to enhance mobile phone protection. Kingfisher specializes in mobile device lifecycle optimization by extending device lifespan through services like refurbishment and reuse.
Diamond Hill Large Cap Concentrated Strategy stated the following regarding The Allstate Corporation (NYSE:ALL) in its Q2 2024 investor letter:
'Among our bottom Q2 contributors were Abbott Laboratories, ConocoPhillips and The Allstate Corporation (NYSE:ALL). Allstate, one of the US's largest auto and homeowners' insurance providers, has seen the pace of premium price increases decelerate, weighing on investor sentiment around the stock. However, the company's underlying fundamentals are intact, margin expansion should continue through the year, and the outlook remains constructive.'
Overall, ALL ranks 11th on our list of most undervalued large cap stocks to buy now. While we acknowledge the potential of ALL as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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