Cover-More Group Ltd (ASX: CVO) is a name more likely to be known by seasoned travellers than most investors. That's because the company, which is Australia's leading travel insurance business with a share of more than 40% of the market, only listed on the ASX 10 months ago and has thus far travelled under the radar as the nation's blue chip stocks have stolen the limelight.
The stock is now trading at $2.26 per share which is nearly 10% below its 52-week high price. However, its discounted valuation is just one of the factors that makes this stock so appealing. Here are three other reasons why it is one of the best stocks to own right now…
1) Resilience. You'd be forgiven for thinking that Australian outbound travel levels would be volatile. Exchange rates, disease outbreaks or airline disasters are just some of the things that could impact the confidence of travellers. However, this chart, which I recently found while I was rummaging through the company's prospectus, shows otherwise. You can see that not even the Swine flu epidemic or the beginning of the GFC managed to break that upwards trend.
Source: Cover-More Group prospectus
It should be noted that such events could actually increase the rate at which travellers take out travel insurance, given the uncertainty they can bring.
2) Management. What good is a car if no one knows how to drive it properly? Cover-More is led by a dedicated management team which has an average of greater than 14 years' experience directly relevant to travel insurance or medical assistance markets.
3) Growth. The company has grown revenues and overall earnings strongly over the last decade, and that trend is expected to continue with high levels of international travel tipped to be sustained. This growth should not only occur in the Aussie market, but also in China and India where the middle-class populations are strengthening.
An even better stock to buy right now
Despite how promising Cover-More Group is as an investment, some investors will understandably be deterred by the stock's slightly lofty valuation (as it stands, it carries a P/E ratio of 33.7).
