The ASX 50 index may not be as widely followed as the benchmark ASX 200 index, but that's not for a lack of quality.
This index is home to some of the highest quality companies that the local share market has to offer.
And while not all shares in the index are necessarily in the buy zone, one that could be is listed below.
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Which ASX 50 share?
According to a note out of Goldman Sachs, its analysts think that QBE Insurance Group Ltd (ASX: QBE) shares could generate big returns for investors.
This morning, the broker has been running the rule over the result of one of its peers in the United Kingdom and was pleased with what it saw.
Commenting on the performance of Lloyds Banking Group (LSE: LLOY), it said:
Lloyds market GWP growth was 6.5% (constant currency) driven by 1.5% rate and 5% volume growth. […] By class of business, rate showed small improvements in most lines partially offset by casualty which saw a decrease particularly in D&O and Cyber.
The broker also highlights that Lloyds reported a strong COR margin. It adds:
1H24 Underlying COR (ex major claims) was 80.6% and reported COR was 83.7% – showing gradual improvement: 1H24 COR benefited from a lower attritional loss ratio ~1.7% v pcp, lower expense ratio ~0.9% v pcp as well as lower catastrophe claims.
Big returns
In light of the above, the broker has reaffirmed its buy rating and $20.00 price target on the ASX 50 share. Based on its current share price of $16.05, this implies potential upside of 25% for investors over the next 12 months.
In addition, the broker is forecasting a 5% dividend yield in FY 2024 and then a 5.2% dividend yield in FY 2025. This stretches the total potential return on offer with QBE's shares to approximately 30%.
Commenting on its bullish view of the stock, Goldman concludes:
QBE is a global commercial insurer with three main geographical operations across Australia Pacific, International (encompassing Europe) and North America. We are Buy-rated on QBE because 1) QBE underlying trends look very positive 2) QBE's achieved rate increases continue to be ahead of loss cost inflation and rate adequate. 3) North America on a pathway to improved profitability. 4) Valuation not demanding. 5) Strong ROE.
Overall, this could make QBE a great option for investors that are on the lookout for blue chip additions to their investment portfolio in September.
