Opinion on  Loews Corp. (L)     Sector: Financial  >  Industry: Insurance (Prop. & Casualty)
Loews a bargain buy: Low P/E, potentially more future investment due to Lorillard spin-off

I believe Loews Corporation ( LTR ) repersents strong value.  Loews operates in a veriety of well-diversified sectors, including property and casualty insurance services, hotels, offshore oil and gas drilling and the operation of an interstate natural gas transmission pipeline system in Texas.  Loews has a low P\E value of 12.22, when other stocks such as Google (GOOG) have P\E ratios of 50+.  It is unclear whether Loews is affected by the sub-prime crisis, but it is likely to survive the crisis due to diversification, and possibly even gain some insurance business due to reduced competition from competing insurers.

The company's management, mainly the Tisch family, also believe strongly in the company: 22.76% of stock is held by company insiders, and director Ann E Berman has bought 4000 ordinary shares, worth approx $191400 (Dec 21).

Loews has also announced on the 17th of Dec that it plans to spin off its tobacco business to Lorillard.  This could attract further investment to Loews as a sizeable proportion of investors and instititions eschew shares in tobacco industries due to litigation risks, ethical concerns and also possible sales declines in the developed world due to anti-tobacco laws.  Fitch confirms that Loews Corp will have a good A credit rating, reducing the cost of borrowings.

UPDATE ON JAN 7: The firm has a net asset value of $64, well above it's current stock price, and Citigroup has a $59 price target on the stock. ( http://biz.yahoo.com/rb/071230/loews.html?.v=1 ).

All the major American insurance companies, including LTR, which has major insurance operations, are due for a major positive correction.  Their P/Es are at all time lows, and at the same time their profits are staying strong, paying out reliable dividends.  In the next few months, all finance stocks, particularly the insurance ones, will rebound.  Insurance companies are some of the most conservatively managed companies and consequently are least likely to suffer under sub-prime strains.  I believe the investing community does not currently understand these facts fully, and these stocks are majorly undervalued.  In the long term, the insurance industry is unlikely to get hurt through Global Warming induced climate change, as the industry covers a diversified range of risks - motor, life, salary protection, injury insurance etc.

Good Luck,
~~~~Shane Halloran.