Among the Best Low Volatility Stocks to Invest In Now #UKFinance
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We recently compiled a list of the 10 Best Low Volatility Stocks to Invest in Now.In this article, we are going to take a look at where The Progressive Corporation (NYSE:PGR) stands against the other low volatility stocks. We will also discuss the latest updates around the market and political situation of the US.
The first week of November has been quite eventful so far. Presidential candidate Donald Trump won the election and President Joe Biden, speaking from the Rose Garden after the election, pledged a peaceful transition of power on January 20.
Moreover, Federal Reserve Chair Jerome Powell announced a quarter-point rate cut on November 7, aimed at supporting strong employment and steady inflation. Economic indicators show solid growth, with GDP rising by 2.8% in the third quarter and consumer spending remaining strong. While the housing sector remains weak, other areas like equipment investment have strengthened.
The labor market shows resilience despite a slowdown in job gains and an uptick in the unemployment rate to 4.1%. Inflation has cooled significantly, nearing the Fed’s 2% target. However, core inflation remains slightly above that level.
In response to questions, Chair Powell noted that the U.S. election isn’t expected to influence near-term Fed policy, as future policy changes and their economic effects remain uncertain. He acknowledged that higher Treasury yields likely reflect expectations of stronger economic growth rather than inflation concerns.
Looking ahead to December, Powell stated that the Fed will assess data on inflation, employment, and economic growth to determine if further policy recalibration is needed. He emphasized the Fed’s effort to balance rate adjustments to avoid moving too quickly or too slowly, aiming to sustain a strong labor market while bringing inflation closer to the 2% target.
The market is taking the news well and all three major market indices closed at all-time highs on November 7. While things seem to be on track, it is important to note that such events sometimes also bring volatility and uncertainty.
Read Also: 10 Best Stocks Under $100 To Invest In and 10 Best Stocks to Buy and Hold For 5 Years.
In a recent interview on CNBC’s Squawk Box, Former Federal Reserve Vice Chairman Roger Ferguson discussed the complexities surrounding recent economic and policy changes. Ferguson noted that the Federal Reserve’s approach remains cautious, taking a “wait-and-see” stance to assess how policies impact the economy.
He mentioned Fed Chair Powell’s resistance to providing overly specific future guidance and instead emphasized data-based decisions. Additionally, Ferguson highlighted that external factors such as tariffs and changes in the energy market could create varied inflationary pressures. While deregulation might counterbalance some inflation risks, tariffs could still add complexity.
The conversation touched on the “neutral rate,” with Ferguson indicating that it will play a crucial role moving forward, especially given shifts in bond yields and their impact on inflation expectations. Ferguson conveyed that uncertainty in policy directions requires flexibility in economic responses, with ongoing adjustments as more details unfold.
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify around 250 large to mega-cap stocks with a 5-year beta (monthly) between 0.2 and 0.8. We narrowed our list to 10 stocks most widely held by institutional investors and listed them in ascending order of their hedge fund sentiment. The hedge fund sentiment was taken from Insider Monkey’s Q2 database of over 900 elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of accountants in a boardroom, discussing strategic moves of an insurance company.
Number of Hedge Fund Holders: 89
5-year Beta (Monthly): 0.37
The Progressive Corporation (NYSE:PGR) offers personal and commercial auto, property, and specialty insurance in the U.S. It operates through three segments: Personal Lines (auto and recreational vehicles), Commercial Lines (business vehicle and liability coverage), and Property (residential and renters’ insurance). Its products are sold through independent agencies, mobile apps, and phone services.
In the third quarter, Progressive (NYSE:PGR) reported solid earnings with GAAP EPS of $3.97 outperforming the estimates by $0.08. Its revenue of $19.46 billion was up nearly 31% year-over-year and exceeded the estimates by $400 million. The company reported a combined ratio of 89%. The combined ratio is a key financial metric used by insurance companies to measure their profitability and efficiency.
A combined ratio under 100% indicates that the company is making an underwriting profit, which means that it is paying out less in claims and expenses than it is earning in premiums, while a combined ratio over 100% suggests an underwriting loss.
In addition, Progressive (NYSE:PGR) achieved record growth with nearly 1.6 million new policies added, driven by strong demand and an increase in media spending. Both direct and agency channels saw significant growth, with record-high direct channel applications and strong customer conversions. Despite historically lower sales in Q4, the company aims to maintain this momentum and continue capturing market share.
The investment management firm, The London Company also commended the company on its increasing market share in its third quarter 2024 investor letter. The firm said that Progressive (NYSE:PGR) has been a strong performer, increasing market share and improving margins through better segmentation of underwriting risks and strategic pricing. The company met its profitability goals by reducing advertising expenses and targeting preferred customers. The firm’s confidence remains high in Progressive’s (NYSE:PGR) ability to perform in various market conditions, thanks to its competitive strengths and effective capital allocation strategy.
Overall PGR ranks 7th on our list of the best low volatility stocks to invest in now. 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 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
