1. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders In Q2 2024: 89
Average Analyst EPS % Revision: 26.4%
The Progressive Corporation (NYSE:PGR) is a sizeable American insurance company. It operates in both homeowner and auto insurance industries. The firm’s hypothesis depends on its expense ratio, premium growth, and investment income since these are the key drivers of any insurance company. On these fronts, The Progressive Corporation (NYSE:PGR) is experiencing positive growth for its policies in force of the auto insurance division. At the same time, the expense ratio is also growing as the insurance company is increasing its marketing spend to grow its personal insurance division. Additionally, lower interest rates mean that the money The Progressive Corporation (NYSE:PGR) has invested in securities yields lesser returns which stresses its investment income. Consequently, the company might have to increase premiums in the future to make up for this drop. However, The Progressive Corporation (NYSE:PGR)’s strong auto insurance growth could create tailwinds for the stock.
Artisan Partners mentioned The Progressive Corporation (NYSE:PGR) in its Q1 2024 investor letter. Here is what the fund said:
“Progressive Insurance shares rose 30% during the quarter. After a difficult start to 2023, the company quickly adapted and finished the year with impressive growth in premiums and underwriting profits. In Q4 2023, it managed to grow its customer base even as it raised rates and improved its underwriting ratios—a trifecta that isn’t often seen in the insurance industry. This performance has continued, which should set the stage for another year of good results in 2024. Perhaps most importantly, it has been able to navigate the environment far better than its peers, many of whom are still reporting sub-par underwriting performance. Progressive has consistently gained market share in the personal auto market over our ownership period and now commands close to 15% of the total market. Its shares are no longer a bargain, but we continue to hold them due to the high quality of this business and the advantaged nature of its low-cost insurance franchise.”
PGR is one of the top MS Overweight stocks to buy. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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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