On a day where the S&P/ASX 200 (INDEXASX: XJO) has dropped more than 1.2%, shares in Cover-More Group Limited (ASX: CVO) have popped 10 cents or 4.7% to be trading at $2.25. Although there was no news released that would specifically explain the jump, it's possible they have simply rebounded following a week of heavy falls.
In addition, the company announced a change in holding last week which saw AustralianSuper acquire roughly 4.85 million shares, increasing its ownership rom 6.66% to 8.19%.
So What: Cover-More Group is Australia's leading travel insurance business with an estimated 46% share of the local market. It recently reported a very strong set of full-year results which included a 20.1% rise in gross travel insurance sales as well as a net profit of $25.1 million – up 14.1% on its prospectus forecast.
The results have helped the stock soar more than 30% over the last six weeks which comes despite last week's broad sell-off.
Now What: Although some investors might be deterred by its high P/E ratio of 29.8x, Cover-More Group's valuation seems more than justifiable considering its strong growth prospects and leading position in a growing market. While airfares remain low, it is expected that a high level of travel will be sustained which should see demand continue to grow for Cover-More's products.
