We recently compiled a list of the 10 Best Low Risk Stocks To Buy in 2025. In this article, we are going to take a look at where The Progressive Corporation (NYSE:PGR) stands against the other low risk stocks.
Risk is a key consideration in investing and portfolio management, as investors generally aim to achieve the maximum return per minimum unit of risk. The true risk of a stock is impossible to measure or quantify, but there are several metrics, such as the volatility of returns or equity beta, that can gauge the magnitude of risk relative to other companies. The equity beta of a stock represents the sensitivity, or correlation, between the returns of the stock and the returns of the broad market. An equity beta below one means that the stock does not respond as much as the broad market to different events, such as macroeconomic developments, monetary policy changes, etc. When a stock with low risk (low beta) is introduced into a portfolio, the overall expected risk of the portfolio is significantly reduced, while the expected return is usually not significantly compromised, leading to a better risk/return profile.
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There are times when the risk profile of a portfolio becomes a more important consideration than maximizing returns, such as during periods of economic uncertainty, market downturns, or when an investor nears retirement and prioritizes capital preservation over growth. In these situations, investors often shift their focus from aggressive returns, such as growth stocks, to minimizing potential losses, adjusting their portfolios to include more low-beta stocks, bonds, or other defensive assets.
Market volatility, geopolitical tensions, and changes in monetary policy can also drive investors toward safer investments to protect their capital. Understanding and managing risk, particularly through measures like equity beta, allows investors to navigate uncertain times without exposing themselves to unnecessary losses. While low beta stocks are usually more mature and low growth businesses, they can deliver strong returns during bear markets, as capital actively starts flowing into them and inflates their market valuation. Consequently, by rotating into low risk stocks at the right time, investors can achieve two goals at once – not only reduce the risk of the portfolio, but also significantly improve the potential return profile.
We believe the broad stock market is currently at a crossroads and has just entered a new “Trump 2.0 regime,” which will be dominated by unprecedented actions and measures. Not only does the new US administration employ tools such as tariffs that were not used on a large scale for decades, but it has also started some strategic political shifts that could threaten decade-long alliances (such as the US-Europe alliance). All of this, coupled with aggressive cost-cutting in federal budgets and spending, has introduced a lot of uncertainty and difficult-to-digest news for investors.
The US stock market is also in correction mode since the inauguration date, and there is no certainty about when this will stop. With many surveys showing deteriorating spending and business outlooks, a slowdown in GDP growth with a potential bear market becomes a probable scenario for the following quarters. These are the times when buying low risk stocks could significantly improve the risk profile of one’s portfolio without compromising the potential return. Low risk stocks, as gauged by the equity beta, are usually found in sectors like consumer defensive, healthcare, as well as some financials and energy, which tend to have more predictable and stable business models. Given this, we will take a look at some of the best low risk stocks to buy now.
Our Methodology
To compile our list of low risk stocks, we used Finviz to filter the companies that have an equity beta below 1.0x. Then we compared them with Insider Monkey’s proprietary Q4 2024 database of hedge funds ownership and included in the article the top 10 names with the highest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A team of accountants in a boardroom, discussing strategic moves of an insurance company.
The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 100
Equity Beta: 0.39x
The Progressive Corporation (NYSE:PGR) is an insurance company specializing in auto, home, and commercial property coverage. It is one of the largest auto insurers in the US, offering policies for personal and commercial vehicles, motorcycles, boats, and RVs. PGR operates through direct-to-consumer sales, independent agents, and online platforms, leveraging data analytics and telematics for pricing and risk assessment. The company also provides homeowners insurance through affiliates and partners, and has a strategy focused on competitive pricing, digital innovation, customer acquisition, and expanding its market share in both personal and commercial insurance segments.
The Progressive Corporation (NYSE:PGR) delivered exceptional performance in 2024, with net premiums written growing approximately 21% YoY to $74.4 billion, representing nearly $13 billion in premium growth. The company achieved record policy growth, adding more than 5 million policies in 2024, which was more than twice the previous highest annual rate of policy growth in its history. PGR demonstrated strong profitability with a combined ratio of 88.8%, well below their target of 96% and approximately 6 points lower than 2023. In claims management, PGR maintains a competitive advantage through efficient operations, with the combination of loss costs and loss adjustment expenses typically representing between 70% and 75% of total company expenditures.
Looking ahead, The Progressive Corporation (NYSE:PGR) is actively monitoring potential impacts from new tariffs and has developed models to assess their implications on loss costs. The company is well-positioned to handle these challenges, maintaining margins below their 96% target combined ratio, and continues to invest in technology and efficiency improvements, particularly in claims processing, where they’ve achieved significant gains through innovations like photo estimating and machine vision technology. With an equity beta of 0.39x, PGR is one of the best low risk stocks to buy in 2025.
Overall PGR ranks 7th on our list of the best low risk stocks to buy in 2025. While we acknowledge the potential of PGR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PGR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.