Technicalspeculator.com’s June 15, 2019: Trade-of-the-Week: Arch Capital Group (ACGLP)

By Tech_Spec
17-June-2019 5:17:22 PM
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This week’s trade comes from the financial sector, the property-casualty insurance industry of NASDAQ.  This Bermuda based company has a compelling dividend yield (5.60%) and a low trailing P/E multiple (9.72). Other highlights are the new all-time high and the recent breakout.  As ACGLP is now overbought, some short-term caution is suggested.  Enjoy.

Company profile: Arch Capital Group Ltd., together with its subsidiaries, provides property, casualty, and mortgage insurance and reinsurance products worldwide. The company’s Insurance segment offers primary and excess casualty coverages; loss-sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors’ and officers’ liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers’ compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employers’ liability insurance coverages; and contract and commercial surety coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides reinsurance for third party liability and workers’ compensation exposures; marine and aviation reinsurance; surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses and commercial property risks; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers, and directly to ceding companies. The company’s Mortgage segment offers private mortgage insurance covering one-to-four family residential mortgages; mortgage insurance to cover previously originated residential loans; quota share reinsurance; and risk-sharing products. This segment sells its products through a direct basis and through brokers to mortgage originators. The company was founded in 1995 and is based in Pembroke, Bermuda.

 

Fundamentals:

Trailing P/E: 9.72, Forward P/E: N/A

PEG: N/A, EPS: 2.47

Div. yield: 5.60%

Beta: 0.65

P/S: 2.43, P/B: 1.03

Profit margin: 17.93%, Operating margin: 20.85%

ROA: 2.32%, ROE: 9.89%

Qrtly earnings growth: 198.20%

Current ratio: 2.03

Additional fundamental data: https://finance.yahoo.com/quote/ACGLP/key-statistics?p=ACGLP

Technicals:

Recently broke out of an 18-month consolidation

New 52-week high, New all-time high

Buying momentum (RSI) is overbought

Buying volume is neutral

The 1st support level is $23, Safety stop is at $22.20

The target is $27.40

Suggested buying approach: As ACGLP is overbought, buy a half position now, wait for a pullback before adding to the position. Always use a 3% trailing stop.

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Author: Tech_Spec

Canada’s only Master of Financial Technical Analysis (MFTA). This 4 – 5 year program offered by the International Federation of Technical Analysts (IFTA) in England is regarded as the global standard. • Instructor of Technical Analysis for the Canadian Securities Institute (CSI). My role is teaching market analysis to industry professionals. • Financial Technical Analyst offering 25 years experience in the financial and investment service industry. • Editor and owner of the Technicalspeculator.com, an on-line independent financial market research and newsletter website. • Registered Securities Advisor

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