Could this undervalued stock make you a millionaire someday?

Swiss insurance and reinsurance giantChubb Co. (NYSE: CB)It may not be as well known in the United States. This is a shame because it is often among the top ten companies in terms of revenue among the insurance companies whose shares are easily purchased by US investors.

Nevertheless, the company was large enough and trustworthy enough to become athen (after sth, and not until then)Insurance companies - for claims that exceed expectations(sth. or sb) else Insurance companies provide support - this means it is not a fly-by-night company. However, its shares are currently trading at a reasonable discount to their fair value.

This raises a key question: Could Chubb be an undervalued stock that could one day make you a millionaire? While we'll never really know until it happens in the future, there's every reason to believe that it could play a role in helping your portfolio achieve that goal.

It does look valuable.

Analysts expect Chubb to report earnings per share of $21.68 in 2024 and $23.76 in 2025. This is a solid earnings growth rate of just over 9.5%. over the next five years, these analysts even expect Chubb's earnings growth to accelerate to an annualized growth rate of nearly 18%.

However, even without this rapid earnings growth, we can make a strong case that Chubb's stock is cheap. The table below shows the discounted earnings model valuation of Chubb, which has a fair value of $324.04, well above the recent market price of $259.13.

Data Source: Author.

The model assumes that Chubb's earnings reach analyst-estimated levels in 2024 and 2025 (Years 1 and 2), reaching a growth rate of 9.5% in Year 5, and then slowing down thereafter until it reaches 3% "in perpetuity." It also uses a discount rate of 12%, which is the rate of return that investors would expect if the the company's performance exactly matches expectations, the expected rate of return for investors.

In short, this means that even if Chubb's industry growth over the next five years falls slightly below analysts' expectations, investors have good reason to believe they will still get a decent return.

In fact, this is the main force behind value investing. Where a company's stock price is low enough relative to investors' expectations, the company doesn't have to achieve spectacular growth to reward its shareholders handsomely. All it has to do is provide a reasonable performance and let the market play out over time.

Starting now.

Value investing works because there are two parts to the stock market return of any company: one part is driven by the company's business performance and prospects, and the other part is driven by market sentiment. Where the market becomes disgusted with a company and prices it below its name, investors have the opportunity to earn additional returns as sentiment recovers.

The problem is, however, that you never know when the market's opinion of a company will change. Therefore, once you find a company that looks like it has a carpet value, it's often a good idea to invest in it, even if you have to stockpilea few funds in anticipation of a better price.

So if you're interested in Chubb as a value stock, today is a good day to take a deeper look. If Chubb's business performance comes close to analysts' expectations over time, then market sentiment is likely to become more positive.

Should you invest $1,000 in Chubb now?

Before buying Chubb stock, consider the following:

Motley Fool Stock AdvisorA team of analysts have just named what they think are the best values for investors.10Only ...... and Chubb is not one of them. The 10 stocks that made the list could generate huge returns in the years to come.

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Chuck Saletta does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

Could This Undervalued Stock Make You a Millionaire Someday? This post was originally published by The Motley Fool.