Opinions
The Panic-Proof Portfolio (Stockchase Research)
Mercury General Corp
MCY-N
TOP PICK
Apr 10, 2025
Stock price when the opinion was issued
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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%
(Analysts’ price target is $70.00)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%
(Analysts’ price target is $80.00)
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%
(Analysts’ price target is $80.00)