Loews Moves a Notch Higher

On Jun 28, Zacks Investment Research upgraded Loews Corp. (L) to a Zacks Rank #3 (Hold).

Why the Upgrade?

Loews aims to strengthen its hotel business, which is the company’s smallest unit. It plans to increase the hotel count to 30 in the next two to four years, besides tripling its net income by 2015. The company remains focused on acquiring and developing hotels. Loews Hotels added properties in Boston, Washington, Los Angeles and Chicago. With enough capital to acquire and develop properties, the company will seek to expand in San Francisco, New York City, Dallas, Toronto and Seattle, and cater to a larger customer base.

Further, the property and casualty operation of CNA Financial Corporation (CNA), the insurance company of Loews, has been performing strongly. Both CNA Specialty and Commercial continue to experience rate increases as well as solid retentions.

Boardwalk Pipeline, another subsidiary of Loews, in its efforts to diversify its operations forayed into the natural gas liquids business by entering into a joint venture with Boardwalk Pipeline Partners LP (BWP). Natural gas is usually an attractive choice because of its relative fuel efficiency, low emissions, quick construction timelines and low capital costs. It will gradually become a major source of power generation.

In addition, to offset the declining natural gas price environment, HighMount, another Loews subsidiary, is focusing its drilling activities particularly in sites such as Mississippian line in Oklahoma and the Wolfcamp strata in Sonora, Texas. This could result in higher oil production.

We expect benefits from these continued efforts to translate to a solid bottom line for the company. The Zacks Consensus Estimate for the second quarter is currently pegged at 80 cents, up 70.2% year over year.

Other Stocks to Consider

Muiti-line insurer CNO Financial Group, Inc. (CNO) is worth considering. It carries a Zacks Rank #1 (Strong Buy).

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