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August, 2008


When a major sector of the stock market is down substantially, it often happens that some good to great companies see their share prices fall as well. So it is now with several insurance stocks in the financial sector, and symbol TRV, or The Travelers Companies, Inc., in particular.

TRV (price per share $44.46), with several lines of personal and business insurance, is one of the giants, having a market-cap of over $26 billion despite the market and Travelers' share price being down substantially over the last 12 months.

TRV has excellent price to value. With all statistics effective as of the close of trading on 8/15/08, the trailing price to earnings ratio is a mere 6.8, while the forward estimate of its P/E is only 7.6, about half the long-term market average. The companies' price is only slightly above the value of its assets less liabilities or book value (P/Bk. 1.0). It has a healthy, way above median dividend of 2.7%, with a safe dividend payout ratio of just 0.2. TRV's average earnings have increased significantly for the past few years. Debt to equity is comfortably low (at 0.2). The return on equity is 16.27%. Cash flow is positive (P/CF low at 5.8). It has a strong balance sheet and little sub-prime involvement.

In my opinion, TRV should be either a good long-term hold or an asset to buy now for a price turn-around in the next couple years. But I am not alone in that view. Two major mutual funds, Dodge and Cox Stock Fund and Dodge and Cox Balanced Fund, have recently reported holdings totaling about 3% of TRV's outstanding shares. Several other value funds hold shares as well. Quicken rates The Travelers Companies, Inc. of "Strong Interest."

As always, I recommend that investors do their own research and/or consult their financial advisors before buying. The info offered above is not a guarantee that trading in TRV stock will be profitable.


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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