This FTSE 100 stock tanked in March and I just bought it while it’s cheap

March was a tough month for many FTSE 100 stocks. Amid the crisis in the US banking sector, many Footsie companies saw their share prices tank.

Now, when the US banking crisis has created some economic uncertainty, I see some of the recent weakness in share prices across the FTSE 100 as very little. With that in mind, here’s a look at the stock’s growing momentum after significant share price gains.

A drop in stock prices

One of the biggest victims of the US banking crisis in the UK was financial services companies Prudential (LSE: PRU).

Back in late January, shares in the insurer – which is focused on Asia and Africa these days – were trading near 1,400p.

However, last month they fell below 1,000p at one stage as the banking crisis sent investors into panic mode.

A buying opportunity?

Now, this stock price seems unfair, in my mind.

Of course, there is some uncertainty here in terms of fixed income losses now that interest rates are higher than in the past (bond prices fall as interest rates rise). Profits may take a hit in the near future.

However, I think the fear here is overblown. And I’m not the only one with this view.

In a new research note, analysts at JP Morgan argued that insurance companies have more solid balance sheets than the market fears and do not face the same liquidity problems as the banking sector.

He pointed out that insurers would be incentivized not to take the risk of asset liability duration due to solvency regulations, which are designed to ensure adequate protection for policyholders and beneficiaries.

We believe the risks from the type of mark-to-market losses, capital issues and liquidity concerns at SVB are not a significant readout to the European insurance sector.

JP Morgan analyst

It’s worth noting that since the research note, JP Morgan analysts have actually raised their price target for Prudential from 1,750p to 1,850p. The price target is about 65% higher than the current price.

Insiders have bought shares

The company director seems to share my view as well.

Since mid-March, three Prudential insiders have bought shares.

The largest purchase was from board member Chua Sock Koong (7,500 shares at HK$100.61 per share), who has considerable financial experience.

I find this insider buying very encouraging.

I have bought it for a comeback

Because of research from JP Morgan, insider buying, and the fact that the stock is currently trading at a price-to-earnings (P/E) ratio of about 12, I took the plunge and bought some more Prudential shares for my portfolio. .

I remain convinced that the company has long-term growth potential, given its presence in Asia (especially now that China has reopened).

And I think there’s a chance that the stock will recover over time.