UFCS Beats Expectations

United Fire & Casualty (UFCS) recently beat quarterly earnings expectations and shares have skyrocketed from $19 to $24.

I wrote about UFCS on two separate occasions back in November last year and mentioned it briefly in January:

• United Fire & Casualty Has Been Down This Road Before — November 17, 2009
• Bargains: Harder to Find, But Still Out There — November 25, 2009
• Insurance Stock Drops — January 8, 2010

I saw UFCS as a company with negative sentiment (mostly continuing claims and expenses from Hurricane Katrina; yes, a hurricane from 5 years ago) that grossly outweighed the fact it was just a decent life and P&C insurance company that was bound to rebound (so to speak). UFCS was selling at a P/B of 0.73 and is now at a P/B of 0.93. If you had been reading my blog and agreed with my view that UFCS was very undervalued and bought at $17.00 per share, you would now have gain of about 38% (roughly 93% annualized) and you’d be beating the S&P 500 by about 30 percentage points.

It’s best to remember that better investment opportunities often come from overlooked and unpopular stocks. I think UFCS is a good reminder of both of these points.