Progressive is one of my biggest positions. It’s a very profitable defensive business with ample growth runway for putting its retained earnings to use and continue to earn high returns on equity.
Progressive belongs to a non-hyped industry, faces potential disruption threats in the very long-term, and it will not be a multi-bagger any time soon. Further, the stock is not that appealing to the many investors craving for dividend income. This sounds like the right market-segment or a good recipe to have the odds in my favour!
Investment thesis: Progressive is gaining market share in the US private auto-insurance market and navigates the competition via its bundling strategy and agency channel. Better segmentation and its focus on low costs ensure high profitability. Its forward-looking product development mitigates disruption threats and ensures competitiveness. Growth opportunities remain and provide a long runway for putting its earnings to use at high returns on equity. Current EPS consensus is too conservative. >> Please klick here for my Progressive write-up (pdf).