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Here’s why it could be time to buy Cover-More Group Ltd

Despite a strong day for the Australian stock market, shares of Cover-More Group Ltd (ASX: CVO) have retreated five cents or 2.3% to be trading at $2.13. The fall comes after Crescent Capital Partners sold its 12.95% stake in the company after the market’s close yesterday at that price.

While Crescent Capital was the company’s largest shareholder with 41.1 million shares, its stake was released from escrow in August when Cover-More released its FY14 profit results.

Cover-More Group is Australia’s leading travel insurance business with an estimated 40% share of the local market. It has enjoyed a strong year since its debut in December 2013, since then it has jumped roughly 33% in price, heavily outpacing Australia’s benchmark S&P/ASX 200 (INDEXASX: XJO) index in that time.

Although the shares are trading on a high premium, commanding a P/E ratio of 31.8x, Cover-More is still presenting as an excellent long-term buy-to-hold prospect. While a high level of outbound travel is expected to continue over the coming years, strong earnings growth is anticipated for Cover-More making its price well and truly justifiable.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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