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Zacks Investment Ideas feature highlights: Progressive, Brown and Brown and Arthur J. Gallagher

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For Immediate Release

Chicago, IL – August 14, 2024 – Today, Zacks Investment Ideas feature highlights Progressive (PGR - Free Report) , Brown and Brown (BRO - Free Report) and Arthur J. Gallagher and Co. (AJG - Free Report) .

These 3 Insurance Stocks Are Crushing the Market

It has been a rather wild few weeks in the market, with the broad stock indexes experiencing the sharpest correction so far this year. Although stocks have bounced back aggressively following last week's sell off, there is still some uncertainty on the horizon.

Amidst this volatility, one sector has stood out and shown considerable resilience even after outperforming all year. Insurance stocks held up exceptionally well during the sell-off and continue to lead the market higher today. Additionally, the Insurance Brokerage industry currently sits in the top 4% of the Zacks Industry Rank.

Progressive, Brown and Brown and Arthur J. Gallagher and Co. have been industry and market leading stocks all year and boast top Zacks Ranks. They have also put up impressive long-term stock performances and enjoy very secure business models. Insurance companies are high margin businesses and provide a service that will be needed regardless of the economic environment.

The Progressive: One of the Best Stocks in the Market

The Progressive has been a standout stock in the market leading insurance sector, delivering exceptional performance both in the short term and over the long haul. With a strong growth outlook, a top Zacks Rank, and a discounted valuation, Progressive stock is well-positioned to continue its impressive run.

This robust performance is not a recent phenomenon; Progressive has consistently delivered outstanding returns over the long term. Over the past 15 years, the stock has compounded at an annual rate of 18.8%, nearly 13xing investors' money during that period.

Progressive's impressive business performance is reflected in its Zacks Rank #2 (Buy) rating. The company's earnings estimates have seen steady upward revisions over the past year, with analysts unanimously raising their forecasts across timeframes.

Progressive currently has a forward earnings multiple of 18.6x, which is below the market average and above its 10-year median 17.1x. However, it should be noted that PGR is expected to grow its earnings per share (EPS) at an impressive pace in the coming years giving it a valuation that is cheap relative to growth.

EPS are forecast to grow 23.8% annually over the next three to five years giving PGR a PEG ratio of 0.78, which is a discount based on the metric.

Brown and Brown: An Incredible Long-Term Performance

Brown and Brown is a leading insurance brokerage firm that was founded in 1939. Its incredible long-term stock performance has been bolstered by steady and consistent growth along with conservative management, which is expected to continue.

Since 1995, Brown and Brown has compounded at a annual rate of 17%, nearly double the market average and more than 100xing investors money over that time. We can see that the other stocks shared here have also posted tremendous returns over that time, but not better than BRO.

Brown and Brown also enjoys a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions. Sales growth this year and next year are expected to increase 10% and 7% respectively and EPS are forecast to grow 30.6% this year and 8.5% next year.

Today, Brown and Brown has a forward earnings multiple of 27.2x, which is above the market average and above its 10-year median of 24.5x.

Arthur J. Gallagher and Co.: Steady Growth Benefits Shares

Although Arthur J. Gallager and Co. has the lowest returns this year and over the long run, it is still a very respectable company, and the stock has bullish catalysts on the horizon. AJG is the world's largest property/casualty third-party claims administrator and ranks the world's fourth largest globally among insurance brokers based on revenues.

In addition to a Zacks Rank #1 (Strong Buy) rating and steady growth estimates the company has dramatically grown its cash pile, providing management considerable optionality.

At the most recent quarterly report AJG shared that its cash position had grown 45% year-over-year (YoY) to $1.4 billion. With this, shareholders can expect the company to return cash in the form of dividends or buybacks, or make another acquisition.

Today, Arthur J. Gallager and Co. is trading at a one year forward earnings multiple of 27.8x, which is above the market average and above its 10-year median of 21.7x. The company has a 0.85% dividend yield and has raised the dividend by an average of 7% annually over the last five years.

Final Thoughts

I have been very surprised by the impressive returns of the insurance industry this year, and based on the recent price action, would expect this strong performance into the year end. Each of these stocks displays relative strength versus the broad market and are all bumping up against their recent highs, indicating a breakout may be imminent.

Not only do The Progressive, Arthur J. Gallagher and Co. and Brown and Brown boast strong earnings revisions trends and relative strength, but their stocks have appreciated with very low volatility as well. Remarkably steady long-term returns and near-term catalysts make these stocks worthy considerations for any investor's portfolio.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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The Progressive Corporation (PGR) - free report >>

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Brown & Brown, Inc. (BRO) - free report >>

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