Cover-More Group Ltd and Helloworld Ltd announce positive news: Should you buy?

Cover-More Group Ltd (ASX: CVO) and Helloworld Ltd (ASX: HLO) have reached an agreement which will see Cover-More become the preferred provider of travel insurance to the retail travel agency.

Recognising that its customers are “increasingly looking for travel insurance cover that is customised for their individual circumstances and plans”, Helloworld entered the arrangement with Cover-More which, as Australia’s largest travel insurance provider, is also highly regarded for its medical assistance and innovation.

Indeed, Cover-More has already been providing services for different parts of the Helloworld network, but the new arrangement will build upon those existing services to enhance the relationship. The agreement will initially last for a five-year term, commencing 1 January 2015, while a new product suite will open soon after.

With high levels of outbound travel expected to be sustained for the foreseeable future (particularly thanks to lower airfares), Cover-More Group should recognise strong growth for years to come. As it stands, the company’s shares are trading at just $1.97, which is more than 21% below their 52-week high, while putting them on a P/E ratio of 18.2x forecast FY15 earnings.

An even better bet than Cover-More Group.

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

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