We recently published a list of 12 High Growth International Stocks to Invest in Now. In this article, we are going to take a look at where RenaissanceRe Holdings Ltd. (NYSE:RNR) stands against other high growth international stocks to invest in now.
What To Expect From The Stock Market in 2025?
On January 15, Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company shared his outlook for 2025. He believes that the market has lost some of its momentum as the prospects of more rate cuts in 2025 have gone slimmer. One of the reasons for less likely rate cuts came a few weeks ago with a stronger-than-expected job market report, which sparked a market dip. Moreover, on the same day, long-term interest rates went higher. The 10-year treasury yield climbed closer to the 5% mark which has haunted stocks in the past.
However, Timmer believes the market is still in a bull phase, primarily driven by rising earnings, which he expects will continue to support market growth. This optimism is grounded in the historical performance of bull markets, where earnings often play a crucial role in sustaining upward momentum. He pointed out that as bull markets mature, they typically experience greater volatility. This means that even minor disruptions can lead to significant market fluctuations. High price-to-earnings (P/E) ratios contribute to this sensitivity, as elevated valuations can make the market more susceptible to corrections. Timmer also highlighted his concerns over interest rates, specifically, the Fed’s ability to cut rates, which are likely to persist. This “interest-rate angst” could continue influencing market behavior throughout the year, as investors will continue to grapple with how rate changes can affect stock valuations and overall economic conditions.
Moreover, Timmer also discussed the shifting dynamics in the stock market, particularly focusing on the transition from a narrow leadership group to a broader market participation. He noted that in the latter half of 2024, there was a notable shift in market leadership from the “Magnificent 7”, to a wider array of stocks. This broadening indicates that more sectors and companies are contributing to market gains, which is generally seen as a positive sign for overall market health. However, since mid-December, following the Fed’s reduced expectations for interest rate cuts, the market has lost momentum, as only 24% of stocks were trading above their 50-day moving average, and just 29% of S&P 500 stocks were outperforming the index. This indicates a narrowing participation in market gains, which is concerning for investors who prefer broad-based growth.
While talking about large-cap stock performance, Timmer raises the question of whether this trend of narrow leadership will persist. He suggested that trends continue to move in the same direction until a significant change occurs. Given that large-cap growth stocks have dominated for years, it is reasonable to assume that they may continue to lead. However, he also cautioned the investors that as per the concept of mean reversion, asset prices will eventually return to their historical averages and when this happens, it could lead to sharp corrections in stock prices. Timmer believes that while 2024 was a “Goldilocks year,” for earnings and valuations, this year can be a tussle between higher earnings and rising long-term interest rates, thereby resulting in a volatile market.
Our Methodology
To curate the list of 12 high-growth international stocks to invest in now, we used the Finviz stock screener and Seeking Alpha. We used the screener as a starting point of our research to get (Ex-USA) stocks that have grown their revenue by more than 15% during the last 5 years. Next, we checked these stocks for 10-year revenue growth rates from Seeking Alpha and selected only those stocks that had grown by more than 25% during the last decade. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s third-quarter database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A top-view of a large city skyline, exemplifying the power and the protection of a reinsurance company.
RenaissanceRe Holdings Ltd. (NYSE:RNR)
10-Year Revenue Growth Rate: 25.19%
Number of Hedge Fund Holders: 29
RenaissanceRe Holdings Ltd. (NYSE:RNR) is an insurance company that primarily provides reinsurance and insurance services. The company is based in Bermuda and has offices internationally including the United Kingdom, United States, Australia, and Singapore. RenaissanceRe Holdings Ltd. (NYSE:RNR) specializes in providing property and casualty reinsurance services, focusing on matching desirable risks with efficient capital solutions.
The company has seen significant growth in its Property and Specialty business segments, with revenue increases ranging from 35% to 75%. Moreover, the company has also benefited from the high interest rates as it generated increased investment incomes. The combination of elevated interest rates and enhanced asset leverage has allowed investment income to contribute significantly to overall earnings.
During the fiscal third quarter of 2024, RenaissanceRe Holdings Ltd. (NYSE:RNR) generated over $540 million in operating income, which corresponds to a 22% return on equity. Management attributed strong performance to effective performance across underwriting, investments, and capital management. The company reported writing $2.4 billion in gross premiums, a substantial rise from $1.62 billion during the same period in 2023. On January 14, Wells Fargo cut its price target from $301 to $288, however, the firm maintained its Overweight rating on the stock indicating potential upside in the future.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding RenaissanceRe Holdings Ltd. (NYSE:RNR) in its Q3 2024 investor letter:
“RenaissanceRe Holdings Ltd. (NYSE:RNR), a provider of reinsurance and insurance services, surged ahead by 22%. Solid second quarter results were generated by favorable reserve releases in the Catastrophe, Casualty, and Specialty segments. There were also lower than anticipated losses in their Total Property business. Net investment income and share buybacks also exceeded projections.”
Overall, RNR ranks 8th on our list of high growth international stocks to invest in now. While we acknowledge the potential of RNR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RNR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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