Mercury General (MCY): 1 Stock to Buy for Higher Interest Rates

It's time to buy Mercury General (MCY). 

Yes, an insurance company… and I know how boring that sounds. 

However, the primary reason is that not many industries do better in a rising rate environment. Pretty much poison for just about every company...but it is actually a magical elixir for insurance firms.

Why?

Insurance companies get your money up front, invest it mostly in interest producing securities. This is called the “float” on your money before they have to pay out claims.

The higher the interest rates > higher the float > higher the profits.

So that is why we want to be in an insurance company at this time. Gladly in the case of MCY we are not just counting on higher rates. 

This company is extremely well run which shows up in their “combined ratio” which is a measure of underwriting profitability. That recently came in 3X better than expected.

All of this goodness showed up in spades in their most recent earnings beat a full $1 ahead of expectations. And 58% above last year's levels. Not the sleepy growth you were expecting from an insurance company.

And yes, the Zen Ratings digs this stock as well with the following profile:

Top 22% Financials

Top 9% Value

Top 6% AI Factor (points to timeliness)

Top 2% Sentiment (the Smart Money knows what’s up)

Overall top 3% of all stocks > A rating

This is not a stock to double like many of the others I select for Zen Investor. This is a steady as you go pick that should continue to outperform over the long haul.

This is especially true if rates stay elevated for a lot longer, which is very possible given concerns over US debt levels. In that case we will be VERY GLAD we picked up MCY now...and perhaps be enticed into buying more of their insurance peers down the line.

What to Do Next? 

Mercury General (MCY) is just one of 20 stellar stocks found in my Zen Investor portfolio.

Yes, that same Zen Investor portfolio up more than 50% this year thanks to the combination of the Zen Ratings and my greater than 40 years of investing experience. 

I know that sounds like BS which is why you can check out my daily performance tracking here. 

When you are ready to improve your results…then click the link below to become a Zen Investor member. 

Discover the Zen Investor & Top 20 Stocks Now > 

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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