Lincoln (ticker: LNC) shares remain bargain-priced, at 7.6 times forward earnings, or less than half of the market’s valuation, even though variable annuity demand now shows signs of stabilizing as market volatility returns. That points to more upside for Lincoln. The stock could return 20% or more in the coming year, as earnings rise and the price/earnings ratio sees a modest rebound.

Annuities are insurance contracts that can turn lump sums or long-term savings into streams of income—a handy trick for retirement savers at a time when fewer of them have traditional pension plans. Variable annuities have returns that are typically linked to stock portfolios, and some offer downside protection from market crashes.

Lincoln is No. 3 in variable annuity sales, with about 9% market share. The No. 1 player is Jackson National, a unit of London’s Prudential (PUK), which is unrelated to the No. 4 variable annuity seller, America’s Prudential Financial (PRU). No. 2 is nonprofit TIAA. For investors, Lincoln offers the purest exposure, with variable annuities bringing in some 45% of earnings. It also sells retirement plans such as group annuities and individual retirement accounts, life insurance for individuals and groups, and workplace plans for things like disability insurance and dental care. 

Whether Lincoln’s variable annuity exposure will be a help or hindrance from here depends on whether industry demand recovers, which in turn relates to what caused the drop to begin with. “Stocks have gone straight up with low volatility for years,” says Joshua Shanker, who covers Lincoln for Deutsche Bank. “If I’m a saver and I see that, why would I pay for the downside protection annuities offer?”

A wobbly market so far this year could get investors thinking more about protection. Lincoln’s variable annuity sales have already been rising for three quarters running. JPMorgan predicts the variable annuity industry will see a sales lift of 4.1% during the second quarter and 4.5% for the full year—its first gain in six years—with Lincoln gaining market share.

Low interest rates have also probably hurt variable annuity sales, because they force issuers to get stingier with benefits. Meanwhile, now-vacated rules from the Obama administration’s Department of Labor, which imposed a strict fiduciary responsibility on sellers of retirement investments, might have temporarily caused some to pull back from recommending variable annuities. But investors should also consider the possibility that variable annuities have lost some of their appeal due to more-structural reasons, such as complexity and fees, much the way investors in recent years have left actively managed funds for low-fee index funds.

Lincoln CEO Dennis Glass says the industry can do a better job of explaining annuities to customers, but that fees are reasonable and the products themselves are as relevant as ever. “We’re still the best place to go for income and protection,” Glass says. “Retirement assets are expected to double by 2030, and with pensions going away, annuities will get their fair share of that.”

Lincoln’s earnings have grown in recent years in part because a rising stock market has increased its fees on assets it manages, and partly because it has brought down costs. It recently closed the purchase of Liberty Life Assurance, which gives it more scale in the group benefits business, and exposure to large customers, versus the small and midsize customers it has historically gone after. The company hasn’t been standing still on product development, either.

In recent years, Brighthouse Financial (BHF) and AXA Equitable Holdings (EQH) have found success selling annuities that allow buyers to dial in specific levels of crash protection in exchange for specific caps on upside participation during bull markets. Sales of such products rose 25% last year. In May, Lincoln entered the market with a product called Lincoln Level Advantage.

Lincoln last year increased its operating revenues 5%, to $14.59 billion, and earnings 14%, to $1.75 billion. Earnings per share rose 20%, to $7.79, adjusted for one-time items, including ones related to tax cuts. Wall Street predicts 8% to 11% earnings-per-share growth over the next few years.

Deutsche Bank’s Shanker sees a buying opportunity after Lincoln’s 14% stock decline so far this year. Normally, a rising stock market combined with rising interest rates would be expected to send insurance stocks higher. In January, General Electric (GE) announced a massive charge for its capital unit for losses related to long-term care insurance, becoming the latest victim in what is becoming a blowup of the category.

In a nutshell, benefits are coming due on insurance sold many years ago, with policyholders living longer than originally expected, and requiring costly care for disease in their later years. Lincoln stock might have been caught in an industry downdraft, even though its long-term care exposure is limited largely to policy riders, with minimal loss exposure. Shanker’s price target of $82 for the stock works out to 8.5 times his earnings forecast for next year, and implies more than 20% upside, plus the 2% dividend yield.

For now, Lincoln can content itself to buy back shares cheaply. It generates some $900 million a year in free cash, equal to more than 6% of its stock market value, and last year spent $725 million on stock