By Andrew Bary

This article is an excerpt from " Alphabet and 9 More Stocks to Buy for 2025," published on Dec. 13, 2024. To see the full list, click here.

At just six times 2025 earnings, Everest Group is one of the cheapest stocks in the S&P 500. That kind of valuation is often associated with troubled companies, but Everest is the fourth-largest global reinsurer, with high returns and impressive growth in recent years.

The stock has risen 2% this year to $362, lagging behind peers like RenaissanceRe Holdings, which is up 38%. Investors are worried that Everest will boost its reserves for potential losses when it reports fourth-quarter profits in early 2025. KBW analyst Meyer Shields says the charge could total a manageable $300 million, or 2% of shareholder equity, and that insurance stocks often rally once they take charges and reassure investors about reserve adequacy.

The company aims to generate 17% annual shareholder returns through 2026. If it can achieve that, the stock could be up 50% in the next two years. If shares continue to languish, Everest could get taken over, given its low valuation -- it trades at book value, a discount to peers -- and its digestible $16 billion market value.

"It's not going to stay at a six multiple forever," says Scott Black, the founder and president of Delphi Investments and a member of the Barron's Roundtable.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

December 29, 2024 00:01 ET (05:01 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.