10 Most Profitable NASDAQ Stocks To Invest In

7. Arch Capital Group Ltd. (NASDAQ:ACGL)

TTM Net Income: $5.45 billion

5-Year Net Income CAGR: 33.56%

Number of Hedge Fund Holders: 37  

Arch Capital Group Ltd. (NASDAQ:ACGL) writes insurance, reinsurance, and mortgage insurance on a worldwide basis, with a focus on specialty lines, the segment of the insurance industry where the more difficult and unusual risks are written. It’s known for its strong financial position, experienced management team, and global reach.

Q2 2024 results from the Property and Casualty segments showcase strong leadership during the hard market. Reinsurance and Insurance combined generated $475 million in underwriting income and $5 billion in gross premiums. Despite higher catastrophic events, Reinsurance generated $366 million in underwriting income. Diversified books of business with higher premium rates contributed to excellent underwriting results. Due to increased storm risk, the company chose not to grow property cat writings at the midyear renewal.

The Mortgage segment generated $287 million in underwriting income, with a 12% increase in new insurance written in the US. The delinquency rate remains low, and credit quality remains high. Arch Capital Group Ltd. (NASDAQ:ACGL) successfully closed the acquisition of RMIC in Q2. While no new business comes with this acquisition, it demonstrates the ongoing pursuit of profitable opportunities.

Overall, the company generated a revenue of $3.78 billion in the second quarter of this year, recording an improvement of 10.30% from a year-ago period. The earnings per share value for the quarter was $2.57.

The company is a well-positioned insurance company with a diversified product portfolio and a strong underwriting strategy. Its Insurance Clock model allows it to effectively navigate challenging market conditions, such as rising climate-related catastrophes and a broader slowdown in the auto industry, suggesting a promising outlook for the company.

Baron Partners Fund stated the following regarding Arch Capital Group Ltd. (NASDAQ:ACGL) in its Q2 2024 investor letter:

“Specialty insurer Arch Capital Group Ltd. (NASDAQ:ACGL) contributed to performance after reporting positive financial results that exceeded Street expectations. Operating ROE was 21% in the first quarter, and book value per share rose 40% due to strong underwriting profitability and the establishment of a deferred tax asset at the end of 2023. Favorable conditions persist in the P&C insurance market with strong growth and attractive returns despite signs of increasing competition. We continue to own the stock due to Arch’s capable management team and our expectation of significant growth in earnings and book value.”