We recently published a list of 10 Best Extremely Profitable Stocks to Buy Now. In this article, we are going to take a look at where RenaissanceRe Holdings Ltd. (NYSE:RNR) stands against other best extremely profitable stocks to buy now.
Can the S&P Hit 7,000 By the End of 2025?
Ed Yardeni, president of Yardeni Research, appeared on CNBC on November 27 to share insights on the market’s anticipated performance in 2025. He emphasized the significance of staying invested despite existing risks and high valuations, noting that the economy has shown resilience and interest rates have stabilized.
Yardeni pointed out that many new investors are gravitating toward small and mid-cap sectors, which he considers a sound strategy due to their relative affordability. He also highlighted the S&P 493 stocks as being undervalued compared to the Magnificent Seven, asserting that the overall market outlook remains positive despite potential tariff fluctuations. He believes that tax cuts and deregulation could enhance corporate earnings.
Yardeni attributed much of the market’s potential growth to an ongoing productivity boom, which he described as still being in its early stages. He noted that productivity levels have improved significantly from nearly zero in 2015 to around 2% currently, with historical precedents suggesting that such booms can reach as high as 4%. This improvement is driven by advancements in technology, which he argues will continue to drive productivity gains.
READ ALSO: 10 Most Promising New Technology Stocks According to Hedge Funds and 10 Best Tech Stocks to Invest In On the Dip.
When discussing whether this boom is primarily driven by artificial intelligence (AI), Yardeni acknowledged AI’s importance but also pointed to other technological advancements in cloud computing, robotics, and automation as contributing factors.
He identified a shortage of skilled labor as a key driver of productivity growth and explained that technology has enhanced efficiency, allowing wages to rise faster than prices, thus stimulating economic activity. In his concluding remarks, Yardeni projected that the S&P 500 could reach 7,000 by the end of 2025 and potentially hit 10,000 by the end of the decade, reflecting his bullish outlook on market performance fueled by these economic dynamics.
A top-view of a large city skyline, exemplifying the power and the protection of a reinsurance company.
Our Methodology
To compile the list of the 10 best extremely profitable stocks to buy now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener, we shortlisted stocks that have grown their revenue and net income by at least 25% over the past 5 years. After sorting our initial list by market cap, we cross-checked the revenue and net income growth rates from Seeking Alpha. We also considered the trailing twelve-month net income and selected stocks that had a trailing twelve-month net income of more than $500 million. Lastly, we ranked the stocks in ascending order based on the number of hedge fund holders in Q3 2024, sourced from Insider Monkey’s database.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
RenaissanceRe Holdings Ltd. (NYSE:RNR)
5 Year Revenue Growth: 28.24%
5 Year Net Income Growth: 42.01%
TTM Net Income: $3.56 Billion
Number of Hedge Fund Holders: 29
RenaissanceRe Holdings Ltd. (NYSE:RNR) is a company that specializes in reinsurance and insurance. The company operates through two main segments including Property Segment and Casualty and Specialty Segment. Reinsurance products include providing insurance to other insurance companies helping them manage risk by covering some of their potential losses. Insurance products offer direct insurance solutions, including coverage directly to clients for various risks.
During the third quarter results for fiscal 2024, the company reported strong financial performance, highlighting key achievements and strategies that have contributed to its success. The company earned over $540 million in operating income for the quarter, resulting in a 22% return on average common equity. Year-to-date, the total operating income reached $1.8 billion, with a 26% return on equity.
Management attributed its success to three main areas including underwriting, investments, and capital partners business. RenaissanceRe Holdings Ltd. (NYSE:RNR) has been able to expand aggressively in favorable market conditions, particularly in its Property and Specialty segments, which have seen year-to-date topline growth rates between 35% and 75%. Moreover, Elevated interest rates have allowed the company to generate significant investment income. Net investment income for the quarter was $423.9 million, up 28.8% year-over-year.
Looking ahead, RenaissanceRe Holdings Ltd. (NYSE:RNR) expects continued opportunities for growth in both its Property Catastrophe and Casualty segments. The demand for reinsurance is projected to increase, particularly with an estimated rise of $10 billion in U.S. catastrophe limit purchases by 2025. It is one of the best extremely profitable stocks to buy now.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding RenaissanceRe Holdings Ltd. (NYSE:RNR) in its first quarter 2024 investor letter:
“Earnings for RenaissanceRe Holdings outstripped expectations as RenaissanceRe Holdings Ltd. (NYSE:RNR) showed better rates of underwriting, higher fee income, and increased investment income—all of which also exceeded levels of industry peers. Pricing also appeared to remain strong for this year and into 2025, and the result lifted RenRe’s shares by 20%.”
Overall, RNR ranks 8th on our list of best extremely profitable stocks to buy now. While we acknowledge the potential of RNR to grow, 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 RNR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
