Imperial Holdings, Inc. (IFT): More Upside With This Company?

Imperial Holdings is also in a tough cash position: Prior to obtaining the $300 million credit facility, it had about $4 in debt for every $1 in cash on hand. Unum’s debt ratio was just over two-to-one, and Life Partners lacked significant long-term debt. However, Imperial’s financial situation is likely to improve markedly with the recent liquidity infusion.

It should be noted that Imperial Holdings is not the only life insurance firm that has seen a massive run-up in its share price over the past several months. Life Partners has increased in value by as much as 50 percent since late 2012, and Unum has jumped by about 40 percent during the same time period. This may be indicative of a general secular tailwind within the life insurance space.

More to Come?

It would be reasonable for shareholders to expect Imperial Holdings’s shares to begin a period of consolidation in the wake of the recent jump. However, some market-watchers have argued that the full impact of company’s recent changes has not yet been priced into its shares. After all, the bump that followed the post-investigation settlement merely returned Imperial’s shares to their pre-raid levels. With the added injection of liquidity, the company could be poised to make a serious run for its pre-raid price target range between $12 and $15 per share. This would be welcome news for current and future shareholders.

In sum, Imperial Holdings, Inc. (NYSE:IFT) has cleared up much of the uncertainty that has depressed its stock price in recent years. Going forward, it looks poised to take advantage of secular tailwinds within the industry as well as positive changes to its financial structure and operational model. Although investors should always use caution around micro-cap and nano-cap stocks, there are plenty of compelling reasons to nibble at Imperial Holdings at these levels.

The article More Upside With This Company? originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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