Monday, March 7, 2011

American International Group Inc. (NYSE: AIG) Q2 2011 Price Target

Recent price: 37.29$
P/E Ratio: 2.65
3 Months Target Price: 47$

Company Description
According to Reuters and AIG's website, American International Group, Inc. (AIG), is a holding company, which through its subsidiaries, is engaged primarily in a range of insurance and insurance-related activities in the United States and abroad. AIG's four reportable segments include: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services. American International Group, Inc. is a leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.

Confidence Margins
Strong resistance $52.67 (+41%)
Light resistance $43.20 (+16%)
Light support $36.16 (-3%)
Strong support $34.01 (-9%)

This government controlled company offers a lot of potential to investors who are willing to ride the current restructuring of the company. There is a lot of upside room left and the company's stock has recently tested some of those levels. Backed by the U.S. government, it seems that this company can't go lower in term of price action and now is certainly a good time to acquire a position in this company.

Entry strategy
For the cautious investor:
Buy the stock for 38$ or less.

For the risk-taking trader:
The May 2011 37$ call option contract seems to be the right position to take, they can be acquired for about 278$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 47$, or keep it until 52$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 47$. This should provide a incredible excess return if the underlying reaches the target price as the contracts will get deeper in the money.

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