Insurance providers use their expertise in risk assessment to help protect assets while offering consumers peace of mind through comprehensive coverage options. Furthermore, favorable market conditions have supported premium growth and investment income, a trend that has enabled the industry to return 10.9% over the past six months, almost identical to the S&P 500.
Regardless of these results, investors must exercise caution as many insurers are sensitive to catastrophic events and economic cycles. On that note, here are two insurance stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Insurance Stock to Sell:
Trupanion (TRUP)
Market Cap: $1.36 billion
Born from a vision to help pet owners avoid economic euthanasia when faced with expensive veterinary bills, Trupanion (NASDAQ: TRUP) provides medical insurance for cats and dogs through data-driven, vertically-integrated products priced specifically for each pet's unique characteristics.
Why Does TRUP Fall Short?
- Capital trends were unexciting over the last five years as its 2.4% annual book value per share growth was below the typical insurance firm
- Estimated book value per share growth of 4.1% for the next 12 months implies profitability will slow from its two-year trend
- Push for growth has led to negative returns on capital, signaling value destruction
Trupanion’s stock price of $31.10 implies a valuation ratio of 3.1x forward P/B. Check out our free in-depth research report to learn more about why TRUP doesn’t pass our bar.
Two Insurance Stocks to Watch:
Allstate (ALL)
Market Cap: $64.18 billion
Born from a Sears, Roebuck & Co. initiative during the Great Depression with its famous "You're in good hands" slogan, Allstate (NYSE: ALL) is one of America's largest personal property and casualty insurers, offering protection for autos, homes, and personal property.
Why Do We Like ALL?
- Pre-tax profit margin expanded by 18.4 percentage points over the last two years as it scaled and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 83.7% to outpace its revenue gains
- Impressive 40.9% annual book value per share growth over the last two years indicates it’s building equity value this cycle
At $255.94 per share, Allstate trades at 1.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
HCI Group (HCI)
Market Cap: $2.27 billion
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
Why Will HCI Outperform?
- Market penetration was impressive this cycle as its net premiums earned expanded by 15.5% annually over the last two years
- Additional sales over the last two years increased its profitability as the 36.3% annual growth in its earnings per share outpaced its revenue
- Balance sheet strength has increased this cycle as its 42.4% annual book value per share growth over the last two years was exceptional
HCI Group is trading at $182.47 per share, or 1.9x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
