CB - Cramer says this Warren Buffett stock is 'ridiculously undervalued'

2024-06-07 20:11:32 ET

Chubb stock price (NYSE: CB) has gained close to 40% over the past twelve months. Still, famed investor Jim Cramer is convinced it’s “undervalued” at writing.

Jim Cramer is bullish on Chubb stock price

The Mad Money host finds it “ridiculous” that shares of Chubb Ltd are currently trading at only 12 times forward earnings and, therefore, sees potential in it of “going much higher”.

Last month, legendary investor Warren Buffett revealed to have loaded up on nearly 26 million shares of the global insurer – a stake that’s currently worth some $7.0 billion ( read more ).

Berkshire’s interest added to Cramer’s optimism on CB as “Warren Buffett knows insurance probably better than anyone else in the world”.

The famed investor also expects Buffett to add to his position moving forward which he believe could be another catalyst for Chub stock price in the near term. The New York listed firm currently pays a dividend yield of 1.36% that makes up for a further reason to have it in your portfolio.

KBW analyst sees 10% upside in Chubb shares

Jim Cramer is bullish on Chubb share price also because it “has a great relationship with China” that he dubbed a “tremendous opportunity” for the $108 billion giant headquartered in Zurich, Switzerland.

Speaking with the famed investor on Mad Money last night, Evan Greenberg also agreed that Asia and the United States has the “greatest potential for growth”. Asia accounts for the majority of CB’s non-U.S. business at present.

In April, Chubb Ltd reported $5.41 a share of core operating income for its first financial quarter that topped Street estimates. The global insurer also came in ahead of revenue estimates and ended the quarter with $2.7 billion in cash. It repurchased $316 million worth of its stock in Q1.

Note that Meyer Shields – a KBW analyst reiterated his buy rating on Chubb stock in a recent research note. His $294 price target suggests another 10% upside from here. Still, corporate insider sentiment is currently negative on CB, as per Business Insider.

In fact, Juan Luis Ortega – its executive vice president has confirmed in a filing with the Securities & Exchange Commission that he sold about $626,000 worth of Chubb shares this week. But he does still own well over 44,000 shares of the insurance firm.

Chubb Ltd increased its stake in Huatai Group in the first quarter by about 9.0%. It now owns over 85% of the financial services company.

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