For those who are interested in trading opportunities, Barchart’s J-Hook Pattern – found in the website’s robust collection of market screeners – is a must-have tool. Only the ideas that meet rigorous criteria are considered genuine J-Hooks. That leaves out a bunch of white noise that one would get from looking at “singular” technical metrics. Still, this screener isn’t just a trading mechanism.
To be sure, the likely primary reason for considering the J-Hook is to search for quick profit-scalping opportunities. For example, if a particular enterprise qualifies as both a J-Hook and a candidate among unusual stock options volume, that may very well be an enticing prospect. However, with the aforementioned screener waving the green flag on auto insurance giant Progressive (PGR), the indicator may be pointing to a viable long-term entry point.
Yes, traders can speculate on PGR stock, of course. One popular mechanism is to trade near-expiry options. However, as an insurance firm, its main goal is to provide financial stability. After all, if something goes wrong, it must have enough funds to cover any claims. Most investors probably view Progressive as a dependable stalwart.
The beauty of the J-Hook is that PGR stock has just crossed off the nine-item criteria required to be part of the list. This provides greater confidence that over the next several sessions, the general direction of the security will be northward.
An Earnings Beat Supports the Case for PGR Stock
Primarily, the catalyst that allowed PGR stock to ping as a J-Hook was the underlying company’s earnings performance for the second quarter. The results were strong, with earnings per share coming in at $2.65, beating the consensus view of $2.05. On the top line, revenue hit $17.76 billion, above the estimate of $17.58 billion.
The latest results provide much substance for analysts’ forward projections. By the end of the current fiscal year, market experts believe that Progressive can post EPS of $11.82. That’s up 93.77% from last year’s print of $6.10. In fiscal 2025, the consensus view is aiming for $12.53, a lift of 6.01% from 2024’s bottom-line forecast.
For revenue, analysts believe that $74.2 billion is within reach. Further, the high-side estimate calls for $75.97 billion. Either way, it’s a significant improvement over last year’s result of $61.55 billion. And in fiscal 2025, the projection calls for $84.11 billion.
Now, a key criticism of PGR stock is that it’s overvalued. For example, shares trade hands at 1.95X trailing-year sales. In contrast, the average multiple for the property and casualty insurance sector is 1.65X. Still, some context is necessary. Assuming a shares outstanding count of 585.7 million, PGR is currently trading at 1.77X projected 2024 revenue.
That doesn’t quite make Progressive stock undervalued. However, the multiple is much more reasonable given the upside trajectory and the overall predictability of the insurance business.
Cynical Fundamentals Could Come into Play for Progressive
Another factor to consider regarding Progressive stock is that the business benefits tangentially from cynical fundamentals. It’s not a natural monopoly ala a utility giant: there’s plenty of competition in the property and casualty insurance space. However, outside of extremely rare nuances, drivers in the U.S. must have auto insurance. That creates a captive audience dynamic.
Naturally, drivers will shop around for the best deals. However, Progressive has the advantage of a recognizable and trustworthy brand. Its commercials and marketing characters are memorable. And if policyholders have good experiences with the company, they’re likelier to tell their friends and family. That only reinforces the subliminal trust factor that Progressive established with its brand messaging.
So, when it comes time to get coverage or to make a policy switch, Progressive is a top choice. The strong financial performance articulates the bullish case, as does the technical J-Hook indicator.
To be 100% clear, the J-Hook does not provide a guarantee for upside success. No indicator is perfect. Frankly, if there was such a thing, it would not be sold to the public. However, Progressive becoming a candidate should dispel the notion that the screener is only useful for short-term swing trading. On the contrary, it points out compelling ideas, some of which genuinely offer a long-term thesis.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
