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4-Star Stocks Poised to Pop: Fairfax

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Canadian insurer Fairfax Financial (NYSE: FFH  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Fairfax's business and see what CAPS investors are saying about the stock right now.

Fairfax facts

Headquarters (founded)

Toronto, Canada (1951)

Market Cap

$4.4 billion


Property and Casualty Insurance

Trailing-12-Month Revenue

$6.88 billion


Chairman/CEO Prem Watsa (since 1985)

CFO Greg Taylor (since 2005)

Compound Annual Book Value Growth (over last 23 years, since present management took over)


Dividend Yield




Travelers Companies (NYSE: TRV  )

CAPS Members Bullish on FFH Also Bullish on

Markel (NYSE: MKL  )

General Electric (NYSE: GE  )

Johnson & Johnson (NYSE: JNJ  )

CAPS Members Bearish on FFH Also Bearish on

Morgan Stanley (NYSE: MS  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Over on CAPS, fully 393 of the 417 members who have rated Fairfax -- some 94% -- believe the stock will outperform the S&P 500 going forward. These bulls include athenamike and All-Star forexnutca, who is ranked in the top 20% of our community.

Late last month, athenamike tapped Fairfax as a genuine value creator for the long haul:

Good insurance underwriting and excellent investing come together to make this an excellent long run growth engine. The insurance market is hardening and future investment returns, although bumpy in the short term, should look very good. I expect book value per share growth of around 10-15% and a future price to book higher than current 0.90x.

In a pitch from four days ago, forexnutca expands on Fairfax as the ultimate Northern jockey stock:

[S]hare buybacks, 3 % rising dividend (6% payout ratio), below book value, 1/2 price to sales, and trades for less than 5 times trailing earnings. This Toronto insurance company is a great asset allocator and has a fantastic CEO, Prem Watsa. Some refer to him as the Canadian Warren Buffett. He was one of the few investors that bet against the housing bubble. He made billions by buying credit default swaps that would rise in value as other companies creditworthiness deteriorated. [Fairfax] continues operations expanding globally, with subsidiaries in Asia and central Europe. With a 23% average return over the last few years (yes, even in 2008!!), this is definitely a buy and hold stock at these levels.

What do you think about Fairfax, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns shares of Fairfax. Johnson & Johnson is a Motley Fool Income Investor pick. Markel is a selection of Inside Value, and the Fool owns shares of it. The Fool's disclosure policy always gets a perfect score.

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