Long
Principal Financial Group Inc (PFG)
Wednesday, January 8, 2014
Company Symbol Industry Rating YTD % Gain
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Principal Financial Group Inc - Last 30 Days
Principal Financial Group Inc - Last 3 Months
Principal Financial Group Inc - Last 6 Months
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The Trade:
Principal Financial Group (PFG) has been a model of consistency over the past year. Since the beginning of 2013, PFG has been trending higher with very little interruption. This afternoon, PFG offers a nice opportunity for a quick gain with a relatively conservative short-term trade.
Dating back to December of 2012, PFG has only closed below its 50-day moving average (daily chart) on three occasions. While that is an impressive feat within itself, each time the Life & Health Insurance stock closed below the 50-day, it managed to pop back above it almost immediately. PFG simply does not like to operate below its 50-day moving average, which is good news for buyers looking for an up-trend to ride. The stock also sports a strong intermediate-term up-trend channel (see chart below), which is always a bullish sign.
In recent trading, PFG hit new weekly highs of $50.86 on December 2 before pulling back through the next couple of weeks. In mid-December, the stock bounced right off of its (you guessed it!) 50-day moving average and resumed its intermediate-term up-trending pattern. Currently, the stock looks like a picture perfect buy with clear upside up at around $51.
The thinking behind this trade isn't rocket science - hold PFG for a ride to $50.85 as long as it stays above its 50-day moving average on a closing basis. If it sounds simple, that's because it is! The potential upside from current prices is +3.25%, while the downside risk of a stop at the 50-day ($48.28) is only -0.87%, making the reward to risk ratio of this set-up roughly 3.75 : 1.
There isn't a lot of analyst chatter surrounding the stock, and it doesn't report its Q3 earnings until February 3rd. So, if you're looking for a high probability, low-risk trade to get your portfolio rolling in the right direction, PFG looks like a great bet.
Entry Method:
Buy at the current price (~$49.20).
Exit Method:
Sell at a close below $48.82 (Below 50-day Moving Average) / An intraday price of $50.85 or above (Profit-Taking)
Company Profile:
Principal Financial Group, Inc. (PFG) is a provider of retirement savings, investment and insurance products and services. As of December 31, 2011, the Company had approximately 18 million customers. PFG's United States and international operations concentrate primarily on asset accumulation and asset management. PFG offers a range of individual and group life insurance, individual and group disability insurance, and group dental and vision insurance. It focuses on small and medium-sized businesses providing an array of retirement and employee benefit solutions. The Company operates in four segments: retirement and investor services, principal global investors, principal international, and United States insurance solutions. PFG's corporate segment consists of the assets and activities that have not been allocated to any other segment. As of December 31, 2011, it owned 26 properties in Des Moines, Iowa, and in various other locations. In February 2013, it acquired AFP Cuprum S.A.
Stock Rating:
The Stock Rating indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 - 10 with 10 being the highest.
Disclosure:
At the time of publication the editor and affiliated companies own the following positions:
None
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