Many investors were biting their nails waiting for 2:00pm to come yesterday. This was done in anticipation of the Federal Reserve’s monetary policy statement. The results show that the Fed has dropped a key word from their statement that everyone was looking for. Indeed, the word on everyone’s mind was &patience&, which the Fed has been using in each of their statements in recent history..until yesterday.
Now that that word has been dropped, there seems to be some consensus that interest hikes will be coming soon, maybe as early as June. Although some stocks stand to lose from this, such as REITs, there are tickers which have much to gain. Such stocks include insurance companies and banks, as they heavily rely on interest rates to turn over profits.
Below, we outline three high ranked stocks, 2 insurance companies and one banking institution. We recommend these stocks for their criteria of rising consensus estimates, as well as other valuation and growth criteria. When the Fed finally raises interest rates, these companies stand to directly benefit from that.
Allied World Assurance Company Holdings, Ltd- AWH
Allied World Assurance Company is one of Bermuda’s major property and casualty insurers. The company has a global reach thanks to its subsidiaries, and offers insurance across the world. AWH is a Zacks Rank #1 (Strong Buy). Expect less volatility with this stock, as it has a beta of 0.43.
There has been significant movement in our EPS consensus over the past 60 days for the current quarter. Two months ago, our consensus called for EPS of $0.73. The current consensus is $0.77. Allied World Assurance also has a nice track record of beating our EPS consensus in 3 of the last 4 quarters by an average of 48.89%. The positive momentum and history with regards to earnings makes AWH a candidate which is likely to beat our consensus when it reports its earnings on 4/22/15.
Northern Trust Corp- NTRS
Northern Trust is a multi-bank holding company that provides a multitude of financial and banking services for clients across the globe. The company holds a Zacks Rank #2 (Buy). This favorable rank paired along with a positive ESP of 3.49% makes Northern Trust a likely candidate to beat on our consensus estimate when it reports its earnings on 4/21/15.
It is worth noting that the company doles out a 1.85% dividend. NTRS also has a nice PEG of 1.93, suggesting that it has a superior growth rate for the price that it trades for. In the last 60 days, our consensus has seen positive movement, going from an EPS consensus of $0.83 to a current consensus of $0.86. The company beat on our EPS consensus last quarter by 16.05%.
Heritage Insurance Holdings, Inc- HRTG
Heritage Insurance Holdings provides property and casualty insurance. The Florida based insurer has gone from a Zacks Rank #3 (Hold) to a Zacks Rank #1 (Strong Buy) in the last week. The company appears to be undervalued on the surface when comparing its PE to the industry average, which are 7.99 and 16.7 respectively.
Heritage insurance has a year over year EPS growth estimate for next quarter of 81.7%. There has been considerable movement in the consensus estimate in the last 90 days. Estimates have moved from $0.61 three months ago to a current consensus of $0.80 for this quarter. The company has beaten our consensus in each of the last 3 quarters by an average of 37.8%. HRTG reports its earnings on 6/3/15.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.