We added AmTrust to our portfolio three weeks ago based primarily on its high score from both the growth and value components of our Rapids Profits Matrix. AFSI earns a nearly perfect score of 93% from our formulas based on Warren Buffett and Peter Lynch, which is extremely rare and usually indicative of near term outperformance.

The key to AFSI’s high scores is its low P/E ratio of 9 times forward earnings combined with its high growth rate in earnings over the past five years, resulting in a PEG ratio of 0.8 (lower is better, less than 1.0 is in the “buy zone”). But recently earnings have leveled off, raising the question of whether AmTrust can continue to grow earnings in the future at its long-term historical pace.

Donald Trump’s surprise victory boosted AmTrust’s share price 10%, but at $27 it’s still 10% below its value a year ago and 20% off its all-time high share price above $35 achieved eighteen months ago. We’ll only need to recover about half of that to reach our target price of $31.50, which we think we can achieve with only a little bit of unexpected good news when the company releases year-end earnings in early February.