The headlines paint a grim picture of the insurance sector…

California’s market chaos… rising climate risks… regulatory pressures…

But one company’s fundamentals tell a completely different story.

While others struggle, this $10B player just triggered my proprietary analysis system with metrics that demand attention:

  • A stellar 7/10 GVI rating (my minimum threshold for consideration)
  • Robust CROCI numbers that “knock it out of the park”
  • Low volatility metrics that suggest stability
  • DCF analysis pointing to 30%+ undervaluation.

The best part? The market hasn’t caught on yet.

This disconnect between perception and reality is exactly the kind of opportunity we look for.

Let me show you why the data – not the drama – makes this our Stock of the Week, and why acting now could be crucial.

This the kind of research my clients pay thousands for… but you get it for FREE as a Total Wealth subscriber.

TRANSCRIPT

Stock of the Week time, friends, and Kinsale Capital Group is my pick.

Kinsale

Let me explain why.

It’s an insurance company. Now, you might say, “Alpesh, have you seen what just happened in California? What’s with the insurance companies?”

Well, wait until you look at the numbers. Let’s go by data, not narrative.

Market cap: $10 billion – not a small fry by any means. It had $1.6 billion in gross premiums in 2023, and 2024 figures will be out very shortly.

Let’s look at some of these great numbers and what caught my eye.

First of all, on my proprietary growth-value-income (GVI) rating, which weighs valuation, growth, and income, we’ve got a 7 out of 10. Now 7, 8, 9, or 10 meets my minimum criteria. Does all the hard work for me in one go. That’s what I like about it.

Forecast P/E ratio is a little expensive. You’re paying $27.90 for every dollar of future expected profit in the company, which, for a non-tech company, I grant you, is a bit expensive.

However, there are other measures of valuation I’m going to cover.

CROCI – that Goldman Sachs method of determining whether a stock is good and likely to perform well – this one knocks it out of the park. Cash return on capital invested is what it stands for.

It’s really important to future stock price growth, and this one hits that, no worries.

Sortino, not bad. The average return versus downside risk – I can live with that. Volatility, pretty low, actually. It just does the job.

Sure, it has some volatile moves that can spook people. A 30% drop isn’t unusual.

However, if we project forward the general trend – not bad, eh? Nearly 50% in 12 months is the projection. It’ll give you some scares in between, as it does. Never a smooth ride.

Something else supporting our analysis… discounted cash flow suggests it’s undervalued. The stock’s price should be closer to $592, which aligns with the numbers I mentioned earlier.

That’s the Stock of the Week as part of the Dealmaker Diary. Hope you enjoyed that. And to all of you out there, I salute you. Thank you.

— Alpesh Patel

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Source: Total Wealth