This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
Did you attend Taylor Swift’s concert over the last 2 weekends?
Her meteoric rise to fame and popularity is phenomenal.
She began as a country singer before becoming a pop singer, propelling her to superstardom.
Taylor has built a massive loyal following where Swifties worldwide will go all out to snatch tickets to see her live.
Today’s stock pick in the insurance industry also has humble beginnings.
Let’s dive in!
Brief History of Allstate
Source: allstateinvestors.com
Allstate began in 1931 providing car insurance, deep in the Great Depression.
This was 10 long years before auto insurance was made compulsory by law. As expected, sales soared through the roof.
The company steadily increased its range of insurance services by launching personal liability insurance and residential fire insurance among others.
In addition, Allstate expanded into Canada.
Allstate have withstood the test of time, especially when the US had experienced multiple large scale devastation from natural disasters.
Business Model and Financials
Source: tradingview.com
Shall we look at Allstate’s total revenue from the past few years?
Looking at the bars in blue, you can tell that its total revenue has been growing steadily, with the exception of 2020 when it experienced a slight dip.
How has its net income (in purple) fared?
It’s a little worrying that its net income has been inconsistent.
However, this may not pose an issue as insurance companies tend to have a steady stream of premiums flowing in.
Here comes the most important question: Are the shares of Allstate worthy for a position trade?
Technical Analysis on Allstate (NYSE: ALL)
To answer that question, let’s turn to its chart.
Its share price has been in a strong uptrend since late Sep 2023. This can be inferred from the number of blue (solid and outlined) candles outnumbering those in red (solid and outlined).
The next question is “Is this uptrend sustainable for a position trade?”
All you need are the 2 main indicators that are on the chart shown above – the green arrow and Trend Impulse Factor.
When a green arrow appears under the latest candle, it signals that a fresh uptrend is here.
You’ll want to buy while the uptrend is still fresh!
Next, you’ll want to pay attention to the color of the bar of the Trend Impulse Factor indicator.
When its bar is dark green, it signifies momentum, giving you greater reassurance that there’s more to come from this stock.
Do you see the appearance of a green arrow under its latest candle?
But the color of its Trend Impulse Factor bar isn’t dark green yet.
This indicates that buying shares of Allstate for a position trade isn’t here yet. You may want to keep this stock in your watchlist and fire when both indicators appear simultaneously.
Yes, I think that this could happen soon!
Conclusion
Source: unsplash.com
There’s a reason many big market participants love the stock of insurance companies. They generate a lot of cash flow and have moats to help them weather economic storms.
Besides, the chart of Allstate (coupled with our proprietary indicators), suggests that buying its shares for a position trade could be here soon.
Both the arrow and Trend Impulse Factor indicators have been tested and proven. They form the TradersGPS (TGPS) system to help you decipher if a stock is ripe for a position trade. You won’t have to feel in the dark and make wild guesses.
Therefore, saving this stock in your watchlist and monitoring it over the next few weeks is a good idea.
What are your thoughts?
Share your thoughts with me below!
