Mercury General Corp (MCY-N)

MCY recently reported earnings growth of 14% over the year on revenue growth of 11%.  Catastrophic loss of reinsurance was down almost 90% from a year ago allowing cash reserves to grow aggressively.  It trades at 13x earnings, 2x book and supports a ROE of 21%.  We recommend trailing up the stop (from $59.50) to $65.50, looking to achieve $90.00 -- upside potential of 27%.  Yield 1.7%

We reiterate this auto insurance provider, operating primarily in California, as a TOP PICK.  It trades at 13x earnings, 2x book and supports a ROE of 16%.  We like that cash reserves are growing, while debt is retired.  We recommend trailing up the stop (from $54.00) to $59.50, looking to achieve $80.00 -- upside potential of 21%.   

We reiterate this insurance provider operating principally in California as a TOP PICK.  Cash reserves are growing, while debt is retired and increased recent insider buying doesn't hurt either.  It trades at 12x earnings, under 2x book and supports a ROE of 16%.  We recommend trailing up the stop (from $49) to $54, looking to achieve $80 -- upside potential of 26%.  Yield 2.0%

We reiterate MCY, a provider of auto insurance principally in California, as a TOP PICK.  We like that cash reserves continue to grow, while debt is retired.  It trades at 15x earnings, under 2x book and supports a 12% ROE.  Its dividend is backed by a payout ratio under 33% of cash flow.  We recommend trailing up the stop (from $44) to $49, looking to achieve $62 -- upside potential of 28%.  Yield 2.0%

We reiterate MCY, a provider of general insurance in California as a TOP PICK.  We like that cash reserves are growing, while debt is retired.  It trades at 7x earnings, 1.4x book and supports a 22% ROE.  We recommend trailing up the stop (from $40) to $44, looking to achieve $67 -- upside potential of 28%.  Yield 2.4%

We reiterate MCY, a provider of insurance in California as a TOP PICK.  The company recently reported the impact from the LA fires will not be as bad as feared and that liquidity remains strong.  It trades at 9x earnings, 1.6x book and supports a robust 26% ROE.  We recommend trailing up the stop (from $35) to $40, looking to achieve $69 — upside potential over 25%.  Yield 2.3% 

The insurer of private homes and autos in the Los Angeles area has traded down aggressively as the wildfires have raged.  Although analysts expect EPS to be reported at near zero this quarter, the outlook for the end of the fires looks positive and we think the news is fully discounted in the share price now.  It trades at 5x earnings, 1.5x book and supports a 34% ROE.  We recommend setting a stop-loss at $35, looking to achieve $70 -- upside potential of 40%.  Yield 2.5%