Top picks 2013: MGIC Investment

Following the mortgage meltdown, this firm is now positioned for on ongoing turnaround.

By TheStockAdvisors Jan 2, 2013 11:28AM
Insurance NULL CorbisBy George Putnam, The Turnaround Letter

For  speculative investors, our top pick for 2013 is MGIC Investment (MTG), the leading non-governmental provider of mortgage insurance.

The company was battered by losses from the subprime mortgage debacle prior to 2008. Those losses are now receding. The company has raised additional capital and the new business that it is writing is very profitable.

MGIC recently settled a long-festering dispute with Freddie Mac, thereby allowing it to continue to insure Freddie Mac mortgages.

The budding recovery in the housing market helps MGIC in two ways:

  • First, the rise in home prices makes it less likely that homeowners with older policies from MGIC will default.
  • Second, an increase in home purchases provides MGIC the opportunity to write more new business at very profitable rates.
There is still some risk that MGIC's pre-2008 business will cause regulatory problems, but we believe that risk is small compared to the substantial gain potential in the stock as the housing sector continues to recover.

(In last year's Top Picks report, George Putnam was the top-performing advisor; his pick of OfficeMax rose 115%.)

More from TheStockAdvisors.com
Tags: MTG
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
267
267 rated 2
455
455 rated 3
612
612 rated 4
682
682 rated 5
695
695 rated 6
632
632 rated 7
472
472 rated 8
279
279 rated 9
147
147 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
VZVERIZON COMMUNICATIONS9
TAT&T Inc9
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.