/biz/ - Business & Finance

>>30253661
You're thinking of it wrong, anon. Cash isn't a risk-free asset class. In fact, right now, it might be almost as risky as stocks. Whatever you do though, DON'T buy bonds as they are literally a guaranteed loss of purchasing power.

Also, despite the above, keep some cash on hand for emergencies (personal or otherwise). USD might be on thin ice right now but it's still the legal tender of the U S of A so don't ignore it completely or you may have to sell for $$$ at sub-optimal times.

ESNT:
* Trading at very low P/E (6.17 at time of writing) and P/B (~1.1 last I checked)
* They are a mortgage insurance company, which might give you pause considering the circumstances, but their entire business model is basically built around being able to survive a 2008-scale event. According to them, they are tail risk hedged, and the default rate of the borrowers they approve is lower than it is for other companies. That said, their main revenue is from premiums, while their main expense is from partially reimbursing their clients if the loans default, so this is not a low-risk stock.
* Before COVID, they had consistently increasing revenues and a high (>50%) profit margin
* So, putting all of this together, if you believe COVID will *not* cause a 2008-like wave of mortgage defaults, this stock may be a buy. A return to form would mean a significant jump in their stock price (they are still ~40% down from their ATH) with further growth in store.

Personally, I'm waiting for Q2 earnings to get a better picture of the impact to their earnings from COVID, but I wanted to get my current state of DD in here to keep things going. I wouldn't buy at much higher than the current P/E without more information.