Hagerty is the insurance play attracting J.P. Morgan analysts

January 15, 2024 at 08:53 AM EST

Insurance stock Hagerty

Some industries refuse to change and invest in innovative technologies; it is sometimes valuable and helpful to adopt the 'If it's not broke, don't fix it' mentality; however, sometimes, it can severely limit the growth and competitiveness a business can retain. Car insurance is one such industry.

This is why finding stocks that can potentially bring a refreshing view to the industry and revolutionize its services can prove to be highly lucrative for you. Hagerty (NYSE: HGTY) is one such stock; it combines a comprehensive list of services that are all built around the automotive industry, from insurance to enthusiast services and much more.

As you will soon find out, there is a good reason behind analysts at J.P. Morgan Chase & Co. (NYSE: JPM) initiating coverage on this stock with an attractive price target. More than that, you will learn why the house view at The Goldman Sachs Group (NYSE: GS) can also act as a tailwind pushing the potential of Hagerty higher.

Set the bar high

Hagerty is digitizing the insurance industry and packaging all the automotive services you can think of in one place. Think of Amazon.com (NASDAQ: AMZN) bringing all the marketplaces into one platform to build one giant online auction for just about any item category.

This company offers its customers insurance on their vehicles. Still, more than that, it allows everyday car owners to find solutions in the marketplace. Looking for a car? You can hop over to Hagerty and fish for one that fits your criteria in their online auction services. If you need to sell your car, visit their valuation services for a fair price assessment.

But wait, there's more. By joining their driver's club you also get benefits like roadside services, member experiences like car rallies and meet ups, online content and more. Okay, far from sounding like a sales pitch, this shows that maybe management took a page out of Amazon's book.

You can confirm this feeling by realizing they also have landed a deal with Samsung TV for premium automotive content. Yeah, this sounds a lot like Prime streaming services. How does the market feel about this combination of services in one stock?

As far as price action, you won't get much history as this stock had its IPO (initial public offering) in 2021. In this case, you will need to focus on the market's alternate language through expectations and valuations. So, here goes nothing.

Connect the dots

So, look, you cannot just go out and add a stock to your watchlist just because it paints a pretty picture; you need to do some research to ensure the numbers match the image. You can find some of the dots you need to connect in the company's latest quarterly results.

Starting from the top, 27.0% revenue growth sets the pace for this company's momentum. And management is only pushing their outlooks higher from where they used to be, which still includes double-digit revenue growth and higher expected additions to their membership programs.

Remember the Goldman Sachs 2024 outlook? These guys see a breakout of the manufacturing sector in the United States pushed by potential FED rate cuts to come soon, which can only mean booming times for the automotive and insurance industry.

Considering that these projections by management were made before the FED announced its new path, this stock might outperform. But don't just take that fact at face value; check with Wall Street and the market itself.

Because this stock is relatively new to the market, not many analysts have an opinion on it. But Truist Financial (NYSE: TFC), as well as J.P. Morgan analysts, do have a view, and it's bullish. With respective $11.0 and $9.0 share price targets, the average upside for Hagerty is 27.2% today.

Knowing what you know now and understanding the fundamental tailwinds that could be pushing this stock higher, it should not be all that surprising to learn that these same analysts see a massive jump in earnings per share. For the next twelve months, the prediction is for EPS to advance by as much as 180.0%!

And don't forget, the view of 'higher for longer' inflation in the United States will only boost the cost of insurance higher, as well as car prices. So whether by auction, transaction services, or insurance premiums, Hagerty could be a stock cheap enough to bring you some potential protection and upside.

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Hagerty is the insurance play attracting J.P. Morgan analysts

Set the bar high

Connect the dots

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