Stock Spotlight: PartnerRE

Most traders would never consider the Property and Casualty insurance industry as a hot area to trade. What could be more boring than a stogy old business like insurance? The Power Ratings tell a different story. The Property and Casualty sector has a Long Term Power Rating of 10. There are 10 stocks in this sector with ratings of 9 and 10.

This week’s spotlight stock PartnerRE (PRE | Quote | Chart | News | PowerRating) is the highest ranked in the sector, matching the sector rating with a its own 10 rank. Our studies have shown that stocks with a Long Term PowerRating of 10 have increased in price 81% of the time one year later. When you are investing for the long term, look for stocks in a solid industry that have a good chance to grow in value. PartnerRE fits this criteria on all counts, even beating out such venerable names in the space such as Berkshire Hathaway and Chubb.

PRE is a multi-line reinsurance company, based in Bermuda. Reinsurance basically means they insure insurance companies. If an insurance company needs to pays out more than it should/can in claims, reinsurance companies step in to make up the difference. This sounds like a money machine to me, how often do insurance companies tap their reinsurance? Multi lines means that they cover a large and diverse pool of risk. PRE is involved in property & casualty, aviation, special risks, life, health and marine, among others. They spread risk between the United States and selected markets worldwide and are very active in the emerging market space as this is where they see great growth potential.

This spreading of the risk is done in a calculated manner in order to prevent one disaster from damaging the company. Earlier in the month, PartnerRE was approved a reinsurer in the Brazil market. Brazil is an economy that appears ready to explode in activity. This alone can potentially add greatly to the company’s revenue and future prospects.

Technically, the stock is coming off of a bottom here and is currently trading in the 66 area. Price is still well below the 50 and 200-day Simple Moving average of 70.77 and 76.11, respectively. There appears to be resistance at 68 with the next level being the 50-day SMA at 70.77.

Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today.

David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.