Morgan Stanley’s Best Overweight & Quality Stocks: Top 25 Stocks

4. The Allstate Corporation (NYSE:ALL)

Number of Hedge Fund Holders In Q2 2024: 61

Average Analyst EPS % Revision: 5.9%

The Allstate Corporation (NYSE:ALL) is the fourth biggest auto and homeowner insurance company in America in terms of market share. This provides it with a sizeable asset base that ensures stability during turmoil along with a wide customer base to which it can cross sell products too. However, the homeowner insurance market is facing quite a bit of turmoil due to climate catastrophes which have forced several insurance companies either out of business or to exit markets such as Florida. The Allstate Corporation (NYSE:ALL)’s shares are up by 32% year to date, as the firm has been helped by milder weather and efforts to grow its customer base. Additionally, the firm is selling its employee benefits division which will further free up roughly $1.5 billion in capital to allow it to focus on other initiatives. Since The Allstate Corporation (NYSE:ALL) has been able to increase premiums by quite a bit lately, if it manages to lower costs, then margins could grow and lead to share tailwinds.

Ariel Investments mentioned The Allstate Corporation (NYSE:ALL) in its Q2 2024 investor letter. Here is what the fund said:

“We added property and casualty insurer, Allstate Corporation. A challenging macro-environment, inflation and lower reserve development led to significant underwriting losses across key markets, presenting us with an attractive entry point. Looking ahead, we expect the strong pricing environment, coupled with lower inflationary pressure and future premium growth to yield upside for shares. Additionally, management is committed to improving its adjusted expense ratio and recently made upgrades to its claims handling processes to minimize loss development and lower claim severities.”