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Barron's This Stock Beats the S&P 500 With Less Risk. 4 Reasons It’s Not Too Expensive.

It is tough to beat the stock market consistently, but one stock has done just that while also being one of the least volatile stocks in the S&P 500.

And home-and-auto insurer Progressive is poised to deliver solid returns to shareholders in the future, as well.

“Progressive may arguably be the least volatile stock in the S&P 500 that can deliver outsize stock performance,” wrote Josh Shanker, senior insurance analyst with BofA Securities, in a note.

While it is difficult for any stock to compete with Nvidia’s compound annual growth rate, or CAGR, of 69% over the past decade, he said, Progressive’s 25%-26% CAGR puts it in the top quintile of S&P 500 stocks of $100 billion or greater value.

But its beta—a measure of volatility, relative to an index—of 0.67 also puts it in the lowest quintile in terms of volatility. A beta of 1 means a stock’s price tends to move with the market, while a beta of less than 1 means it tends to be less volatile than the market.

“That daily volatility has only increasingly declined with time, showing a daily trading beta of just 0.21 over the past year,” the note said. “Were it not for [Eli Lily’s] incredible 148% run over the past year, Progressive would likely hold the crown for the S&P 500’s most efficient stock: most return with least volatility.”

Shanker, who has a Buy rating on the stock, upped his price target to $261.00 from $256.00. Progressive’s shares are currently trading around $188.00.

BofA said the S&P 500 is trading at 18.9 times 2025 consensus earnings per share, while Progressive trades at 17.7 times consensus numbers. Shanker said this is 31% too low and poised to materially rise.

While some believe Progressive’s shares have become too expensive, shares are trading in-line with its historical range on both absolute and relative-to-market multiples, according to BofA. 

The argument that 17.7 times 2025 consensus EPS is too much to pay for a stock such as Progressive is flawed for several reasons, BofA said.