Trade ideas

Global Trade Idea: Globe Life Inc. (GL US)

Globe Life is an insurance company that specialises in providing individual life insurance and supplemental health insurance to middle-income families. The group's subsidiaries, including American Income Life and Globe Life and Accident, offer whole and term life insurance policies and supplemental health insurance coverage including illness, accident, and Medicare Supplement policies. The group delivered a robust performance in FY20, which is expected to continue into the new financial period on the back of strong top-line momentum that benefited from growth in agent counts and increased awareness about the value of financial protection in the wake of Covid-19.
Technically, the recent price movement remains close to a 45-degree angle which makes the stock attractive as an investment option. According to the Gann angles, price movements in a 45-degree angle are regarded as a healthy trend with the expectation for the price to continue moving upwards along this angle. The stock also remains above its 200-day simple moving average, which signals that the long-term trend is bullish. Downward momentum is forming a trough, which is also supportive of the overall trend.

Relative Strength Index (RSI) forward calculations suggest that the share will be in overbought territory at around $115, which classifies our target price of $109 as realistic.

Share Performance

Share Information

Share code	GL
Industry	Insurance
Market capatalisation (USD)	11.53 billion
One year total return	24.74%
Return year-to-date	5.10%
Current price(USD)	99.41
52 weeek high(USD)	102.25
52 week low(USD)	62.75
Financial year end	December
Summary	Despite a recent dip in the share price, several technical indicators are guiding for upside potential

Consensus expectations

Share code	FY20E	FY21E	FY22E	FY23E
Headline Earnings per Share (USD)	6.88	7.35	8.18	8.66
Growth (%)	-	6.85	11.29	5.82
Dividend Per Share (USD)	0.75	0.79	0.83	0.89
Growth(%)	-	5.07	5.58	6.61
Forward PE (times)	-	13.53	12.15	11.48
Forward Dividend Yield (%)	-	0.79	0.84	0.89
Summary	Growth prospects remain robust for the group with Covid-19 headwinds expected to dissipate

Buy or Sell Rationale

Technical Analysis :

The gradual upward trajectory of the on-balance volume (OBV) - which uses volume flow to predict stock price changes - indicates that money is flowing into the stock. Above average volume activity also supports the bullish bias.
According to the OBV chart (lower panel), it is likely that "smart money" (cash invested or wagered by those considered experienced, well informed, "in-the-know," or all three) is flowing into the stock from institutional investors.
Our entry range is $95 to $100 or as close as possible to the current reference price of $99.41. A fall below the suggested entry range suggests that a structural change in the trend is occurring and provides a reason to negate the trade idea.
Our upside target is set at $109 (~9.6% upside potential from current levels), which is close to the high reached in February 2020. Profits can be harvested around these levels.
Time to exit is around the middle of July 2021, taking a medium-term stance, with the option to extend for a longer period.
A price below $95 (~4.4% downside potential from current levels) remains a major concern for downside potential and is recommended as a stop-loss.

Long-term fundamental view:

Globe Life operates in four segments - life insurance, supplemental health insurance, annuities and investments.
Life Insurance (~55% of revenue) offers individual life products. Supplemental Health (~25% of revenue) offers critical illness, accident, Medicare Supplement, and limited-benefit surgical and hospital policies, and Investments (~20% of revenue) manages the group's capital resources. The annuity segment (~1% of revenue) manages runoff fixed-benefit contracts that are no longer actively marketed by the company.
Looking at recent results, business metrics remained strong during the fourth quarter with Covid-19 headwinds expected to continue wanning over the next few quarters.
Earnings came in ahead of expectations, sales were robust, and agent count rose at a brisk pace. Premiums rose 7% y/y in 4Q20, helped by improving policy retention and a 13% gain in life-insurance sales.
The company executed well in 2020 by shifting to more virtual processes, which bodes well for medium-term prospects as it more efficiently facilitates recruiting and gives agents more flexibility.
Globe Life has been relatively resilient despite the pandemic, with ongoing momentum in recruiting and sales likely to lead to upward revisions in earnings forecasts, especially once Covid-19 claims abate.
The group also has marginal exposure to complex interest rate-sensitive liabilities, consistently returns capital shareholders and manages expenses efficiently.
Looking at downside risks, the insurance sector is exposed to ever-increasing regulatory demands, a generally lower interest rate environment, lower uptake during tough economic cycles and intense competition within the operating environment. Claims associated with Covid-19 also pose a risk; however, this is expected to dissipate as the vaccine roll-out gains momentum and mortality rates improve.

Update on previous Trade Ideas

Trade Idea	Status	Entry	Current	Movement	Summary	Time to exit
WBA - BUY	Continue to hold	49.32	54.18	9.9%	Remains in overbought territory on the daily time interval. Remains above its 200-day simple moving average. Upside momentum halted again, which is a concern to the bullish trend. Take profit target set at $61. Trailing stop-loss at $50.50.	+/- 21 May 2021
FDX - BUY	Continue to hold	261.83	286.58	9.5%	A Golden cross signal remains of interest. Remains above its 200-day simple moving average. A bullish MACD crossover on the weekly time interval supports the bullish trend. Upside momentum supports the bullish trend. Take profit target set at $300. Trailing stop-loss at $270.	+/- 27 April 2021
AMZN - BUY	Continue to hold	3092.93	3372.20	9%	The appearance of a Doji Morning Star Japanese candlestick pattern in the price remains of interest. Remains above its 200-day simple moving average. Upside momentum supports the bullish trend. Take profit target set at $ 3 500. Trailing stop-loss at $ 3 196.	+/- 15 May 2021
SPGI - BUY	Continue to hold	339.24	369.10	8.8%	Increased volume activity at the entry price remains of interest. Approaching overbought territory on the daily time interval. Remains above its 200-day simple moving average. Upside momentum supports the bullish trend. Take profit target set at $382. Trailing stop-loss at $352.	+/- 7 May 2021
FISV - BUY	Continue to hold	115.55	124.29	7.6%	The price remains in an incomplete symmetrical triangle pattern. Remains above its 200-day simple moving average. Fading upside momentum remains a concern. Take profit target set at $133. Trailing stop-loss at $117	+/- 7 May 2021
ADBE - BUY	Continue to hold	469.09	504.04	7.5%	A price that remains in an incomplete bull flag pattern remains of interest. Remains above its 200-day simple moving average. Potential bullish MACD crossover on the weekly time interval. Fading downside momentum also supports the bullish trend. Take profit target set at $542. Trailing stop-loss at $475.	+/- 31 May 2021

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Global Trade Idea: Globe Life Inc. (GL US)

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