January Stocks: Two Insurance Stocks to Purchase Hand Over Fist
Penny Stocks: Purchase Hand Over Fist $157 Billion
There are undiscovered treasures in the insurance sector that, in the long run, can provide returns that exceed the market.
Purchasing quality companies with competitive advantages and strong cash flows that can continue to grow regardless of the state of the economy is a wise move to make when investing in the stock market with the goal of building wealth.
The insurance sector is one area where you may find hidden treasures like this. The constant demand for insurance companies’ products makes them a great source of cash flow.
Well-managed insurers can produce incredible market-beating returns with less volatility over the long term, even though these are not particularly exciting businesses.
Reputable insurers are a wise choice and can be a great complement to your portfolio’s diversification. This month, you should think about purchasing shares of Progressive (PGR -0.10%) and Berkshire Hathaway (BRK.A -0.81%) (BRK.B -0.84%) insurance stocks. What they can add to your portfolio is as follows.
1. The insurance holdings of Berkshire Hathaway are essential to its expanding cash reserve
It’s unlikely that Berkshire Hathaway is the first company that springs to mind when you think of insurance stocks. But if you look deeper into the conglomerate, you’ll discover that it owns a large number of insurance companies, which play a significant role in its expanding cash reserves.
Berkshire’s float has increased by an astounding 863,732% from $19 million to $164 billion since 1967. Over time, Berkshire’s insurance companies have written profitable policies with remarkable skill, and now make up “a very large chunk of Berkshire’s value,” according to Buffett.
Currently, Berkshire has $157 billion in cash on hand, which it can utilize to fund acquisitions or stock and bond purchases. With its solid financial foundation, Berkshire is a great stock that long-term investors can own with confidence.
2. Progressive’s successful underwriting helped them dominate the market.
Another excellent insurance provider that belongs in your portfolio is Progressive. The insurer’s dedication to underwriting profitable policies has resulted in an impressive track record of success.
Since then, Progressive has continued to underwrite policies with a cautious, methodical approach. Furthermore, it makes no difference that the company’s investment portfolio isn’t particularly aggressive.
Compared to the S&P 500’s annualized return on investment, the company has provided investors with an annual return of 16.4% since 1993.A ten percent return. The insurer keeps writing profitable policies, which is the best part.
The volatility of your portfolio can be reduced by these two excellent stocks
If you want less volatile stocks with market-beating potential, consider Berkshire Hathaway and Progressive. A stock’s beta value indicates its movement in relation to the market as a whole. A stock is considered less volatile than the overall market if its value is less than 1.
With five-year betas of 0.86 and 0.42, respectively, Berkshire and Progressive are good investments if you want to reduce portfolio volatility.
These two stocks can be great additions to your diversified portfolio this January because of their well-managed insurance operations that generate consistent cash flows.
Is it currently a good time to invest $1,000 in Berkshire Hathaway?
Prior to purchasing stock Think about this regarding Berkshire Hathaway:
The Motley Fool Stock Advisor analyst team has determined the top ten stocks that investors should purchase right now. and one of them wasn’t Berkshire Hathaway. In the upcoming years, the ten stocks that made the cut could yield enormous returns.
When Nvidia created this list on April 15, 2005, you could have earned $291,444 if you had invested $1,000 at the time we suggested it.
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