I Wouldn't Bet Against This Financial Stock in a Recession.
You can't drive a car without auto insurance, and Progressive can use the float to invest in a downturn.
Overview
There's no question that a recession could be a problem for Progressive (NYSE: PGR). If that economic downturn led to a bear market, it would be an even heavier burden. However, neither a recession nor a bear market is likely to derail Progressive as a business for very long. And a bear market might actually be a long-term opportunity for the auto insurance company. Here's why I wouldn't bet against Progressive in a recession.
Progressive largely sells auto insurance. It collects premiums up front and pays claims later. In the meantime, it gets to keep the cash, which is known as the float, and invest it. There's an important feature of auto insurance: You legally can't drive a car without it. So while a recession might be a headwind, consumers aren't going to stop buying auto insurance in large numbers. In this way, the business is fairly resilient.
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Originally published at www.fool.com.