TopPicks from Lorne Steinberg, president, Lorne Steinberg Wealth Management
Lorne Steinberg, president of Lorne Steinberg Wealth Management, discusses his top picks: Allstate, American Express, and CVS Health.Allstate is an exceptionally well-run property and casualty insurer, as evidenced by its enviable track record of free cash flow generation. This company is a model of value creation, as it has bought back over half of its shares over the past fifteen years while growing its market share and raising dividends.
The insurance sector will benefit from higher bond yields and the company is raising premiums in response to the inflationary environment, both of which should boost earnings over the next several years. At the current price, the shares trade at a P/E of nine with a three per cent dividend yield, offering significant upside with a comfortable margin of safety.Founded in 1850, American Express is known principally for its charge cards but also extends credit and provides a suite of related services to businesses and merchants. The company is positioned at the higher end of the card business.
The shares have declined because of recession fears and at the current valuation, they offer compelling value.CVS is arguably the best-positioned company in the U.S. healthcare delivery industry. U.S. reimbursement models are evolving to value-based care and the company is leveraging its medical, pharmacy and lab data to deliver a lower-cost, more effective model.
CVS is using free cash flow to reduce debt while maintaining a healthy dividend. At a P/E of 11, these shares offer compelling value.
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