The Panic-Proof Portfolio (Stockchase Research)Mercury General CorpMCYTOP PICKJul 08, 2025

We reiterate MCY, a property and auto insurance provider with 6300 agents in 11 US states as a TOP PICK.  Recently reported earnings per share growth was 60% higher than analyst expectations, with premiums earned up 13% -- double the growth expected.  It trades at 9x earnings, 2.2x book and supports a robust ROE of 33%.  We continue to recommend a stop at $89, looking to achieve $120 -- upside potential of 17%.  Yield 1.3%

Our PAST TOP PICK with MCY is progressing well.  To remain disciplined, we recommend trailing up the stop (from $81) to $89 at this time.  

We reiterate MCY, a property and casualty insurance provider focused on California auto policies as a TOP PICK.  Recently released earnings showed growing cash reserves, while debt was reduced on the back of a 14% revenue boost and lower than expected claims.  It trades at 11x earnings, 2x book and supports a 20% ROE.  We continue to recommend a stop at $81, looking to achieve $110 — upside potential of 22%.  Yield 1.3%

Our PAST TOP PICK with MCY has achieved its target at $100.  To remain disciplined, we recommend covering half the position at this time and maintaining the stop at $81.  

Our PAST TOP PICK with MCY is progressing well.  To remain disciplined, we recommend trailing up the stop (from $74) to $81 at this time.  

We again reiterate MCY as a TOP PICK.  Recently reported earnings showed a 160% increase in profits, 13% increase in revenues, growing cash reserves, and debt reductions.  It trades at 2.2x book, 18x earnings and supports a 16% ROE.  We continue to recommend a tight stop at $74, looking to achieve $100 -- upside potential of 29%.  Yield 1.6%

Our PAST TOP PICK with MCY is progressing well.  To remain disciplined, we recommend trailing up the stop (from $65.50) to $74.00 at this time.  

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 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%