The S&P 500 has hit an all-time high in 2024, confirming a new bull market. With so many stocks surging, investors might wonder if there are still opportunities in the market today.
Financial stocks can make a solid addition to investors' portfolios. They can provide diversification into companies with stellar cash flows and track records of success. Here are three top-notch finance stocks to buy this March.
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1. Berkshire Hathaway
When it comes to solid returns over the long haul, Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) is one of the best. Under CEO Warren Buffett's leadership, the conglomerate has delivered annualized returns of nearly 20% over the past 59 years.
The stock has been a beacon of stability. One way to look at a stock's stability is its beta, which measures the stock's correlation with a benchmark index, such as the S&P 500. A beta over 1 means a stock is more volatile than the benchmark, while a beta under 1 is less volatile. Over the past decade, Berkshire's beta has been 0.63.
Although you don't want to get caught up in one metric, Berkshire's low beta is a testament to the stability of its business model. It owns numerous companies across retail, railroads, materials, construction, and insurance. These are a stellar source of cash flow for the conglomerate and help feed its growing cash pile. Today, Berkshire has a $371 billion portfolio across 45 stocks.
And Berkshire takes a prudent approach to managing its cash flow, which provides the business with strong stability. Today, it has a record cash pile of $168 billion. Given the stellar financial foundation and investing acumen of Buffett and his team, it's a solid stock to buy and hold.
2. Progressive
Progressive(NYSE: PGR) is another excellent long-term performer that can provide stability to a portfolio. The insurance company has dominated the industry for decades, consistently posting industry-beating profitability with its policies.
One reason for Progressive's success is its long-term focus on writing profitable policies. When the company went public in 1971, CEO Peter Lewis prioritized turning an underwriting profit.
At the time, it was commonly accepted that insurers didn't profit from their policies but made money from their investment portfolios. Lewis eschewed that thinking and set a companywide goal to earn $4 on every $100 in premiums the insurer took in.
This profit motive set the foundation for Progressive underwriting the most profitable policies it could, even if it meant forgoing drivers who wanted lower-cost coverage. Over the past 23 years, the insurer has achieved its goal of $4 profit on every $100 in policies and delivered annual returns of 17.7%, crushing the S&P 500 in the process. The company is in good position to continue performing and can make an excellent addition to your portfolio.
PGR total return level data by YCharts.
3. Interactive Brokers
Interactive Brokers(NASDAQ: IBKR) is a stock brokerage that has achieved stellar growth over the past few years. Since 2017, Interactive has grown its customer count from 483,000 to 2.56 million, a 430% increase.
Its growth is due to its appeal to tech-savvy customers and its low-cost trading platform. Many of its senior managers have a background in software engineering and focus on automating as much of its business as possible.
As a result, the company offers some of the lowest commissions in the industry. It has also done a good job attracting more customers amid higher interest rates because of its 4.8% yield on uninvested cash.
By automating its platform and leveraging its expertise, Interactive Brokers has achieved appealing profit margins and stellar bottom-line growth. Not only that, but the stock is priced reasonably at 19.3 times earnings and looks like another excellent stock to buy this March.
Should you invest $1,000 in Berkshire Hathaway right now?
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Courtney Carlsen has positions in Progressive. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Interactive Brokers Group and Progressive. The Motley Fool has a disclosure policy.
