Cover-More Group Ltd (ASX: CVO) is a name probably better known by well-travelled individuals than most seasoned investors. That's because Cover-More Group has in excess of 25 years' experience in providing Australians with travel insurance for both domestic and international trips. It has also established itself as the leader in its industry with an estimated 46% share of the market.
'So why has it travelled under the market's radar?' I hear you asking.
Cover-More Group only recently made its debut on the Australian Stock Exchange in December 2013. Although the stock took off quite strongly, it hit a patch of turbulence, particularly following a profit warning from Flight Centre Travel Group Ltd (ASX: FLT) amid rising concerns of declining outbound travel.
However, the stock now seems to be back on track and is posing as a very attractive prospect for investors who choose to act today. Here are three reasons why you should consider adding Cover-More Group to your holdings.
- Growth. The company recently delivered its first annual report since its IPO which revealed far greater growth than had been forecast in its prospectus. Net profit rose to $25.1 million (up 14.1% on forecasts), while the company also experienced a 20.1% rise in gross travel insurance sales to $369.1 million.
- Strong financials. The company enjoys strong cash flows which allowed it to not only announce a 4 cent per share dividend (higher than its prospectus forecast), but also a special 3.2 cent per share dividend. While investors won't receive that special addition every year, it certainly highlights the strong financial position enjoyed by the company.
- Outlook. Cover-More Group enjoys a leading position in a growing market. Although the world has witnessed a number of air tragedies over the last 12 months, high levels of international travel are expected to be sustained. Furthermore, improving consumer confidence levels and a strong Aussie dollar should also help.
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Cover-More Group is a company that has been on my radar for some time and it could well be amongst my next acquisitions.
