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Jackson Financial Inc (NYSE: JXN): A Bull Case Theory

Jackson Financial (NYSE: JXN) is one of the top 10 US retail annuity companies, recording $12.8 billion in annuity sales last year. Spun from Prudential in 2021, JXN has consistently generated and distributed capital to shareholders while historically trading at a discount to peers despite concerns around business opacities, GAAP earnings volatility, and quality differences. Here, we summarized an April bullish thesis published by nha855 on Value Investors Club.

A successful businessperson looking over their portfolio, with a backdrop of the New York skyline, representing a global presence.

The thesis backs its outlook with a recent structural change in the company and a track record of aggressive capital generation and returns to shareholders. While JXN expects to return between $550 million and $650 million, or over 13% of its market cap, this year to shareholders via dividends and share buybacks, the capital return could reach $875 million, or over 17% of the company’s market cap, in the following years. The thesis further highlights that JXN could return almost 45% of its market cap to shareholders in the next three years as its rare capital return algorithm is well-positioned to generate shareholder value.

Meanwhile, JXN established and funded Brooke Life Reinsurance Company (Brooke Re) in January. Brooke Re will enable JXN to reduce non-economic hedging and the company’s Risk-Based Capital (RBC) ratio volatility by aligning its reserve liability with business economics, boosting earnings power and the ability to return more capital to shareholders. Moreover, the Brooke Re move is also expected to offer better business visibility for investors. In April, the JXN stock was cheap at 4x P/E with a 12% distributable FCF (dFCF) yield. During a Q4 2023 company call, JXN management projected annual capital generation of over $1 billion from previous guidance of $700 million-$900 million. The thesis highlighted that a $1 billion capital generation could prompt the company to return capital of up to $875 million annually as the Brooke Re transactions seasons.

JXN is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held JXN at the end of the first quarter, which was 24 in the previous quarter. While we acknowledge the potential of JXN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as JXN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

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Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

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This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

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AI is at a similar inflection point.

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As an investor, you want to be on the side of the winners, and AI is the winning ticket.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…