Goosehead Insurance Stock: Short-Term Financial Sector Best Buy (NASDAQ:GSHD)

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Our investment thesis

Is expressed in the bullet points above, where the ratings and size of short-term capital gains are put on a comparable basis with the alternative investment candidates.

The dominance of Goosehead Insurance, Inc. (GSHD) in tracking the results of this analysis against comparable investment alternatives makes reading the rest of this article worth your time and effort if you are interested in rates short-term capital gains. Earnings likely to be multiples of what stock index averages regularly offer.

Description of the main object of investment

“Goosehead Insurance, Inc. operates as a holding company for Goosehead Financial, LLC which provides personal insurance agency services in the United States. The company operates through two segments, Corporate Channel and Franchise Channel. flood, wind, earthquake, excess liability or umbrella, motorcycle, recreational vehicle, general liability, property and life insurance. As of December 31, 2020, the company had 1,468 deductibles in Goosehead Insurance, Inc. was founded in 2003 and is headquartered in Westlake, Texas.”

source: YahooFinance

Street Analysts Growth Forecast

Yahoo finance

Rewards and risks of competitors in alternative investment

Figure 1

MM covering implicit price rewards and risks

Used with permission

Upside price rewards come from behavioral analysis (of what to do right, not mistakes) by Market-Makers [MMs] because they protect their capital at risk against possible future detrimental price movements. Their predictions of potential rewards are measured by the green horizontal scale.

The risk dimension is that of actual price declines likely at their most extreme while being held in the previous pursuit of upside rewards similar to those currently seen. They are measured on the red vertical scale.

Both scales are percent change from zero to 25%. Any stock or ETF whose current risk exposure exceeds its reward outlook will be above the dotted diagonal line.

The best reward-risk trade-offs lie on the border of the down and right alternatives. As the “standard” market index currently, the S&P 500 Index ETF (NYSEARCA: SPY) is at the location [3]. The current “frontier” trade-off between risk and reward ranges from Y to [8] spy at [9] to AON to [1] and at HCI at [3]. Our main current interest is the on-site GSHD [4].

Is the extra reward of GSHD worth the extra risk compared to SPY or HCI at [3]? A fuller description of investment considerations should help investors’ decisions about the suitability and credibility of available investment alternatives.

Additional information on the value perspective

Figure 2 presents some of these considerations, drawn from the results of previous MM forecasts having the same proportions of previous expectations from top to bottom as today.

Figure 2

detailed comparative data

used with permission

The advantage of determining market makers’ forecasts for future stock prices is that they offer many more dimensions than the typical “street analyst” forecast of a single target price at any given time. Instead of a single higher (or lower) future price, MM predictions are drawn from valid market data over relevant (usually shorter) time periods for the upper and lower price limits considered likely to be encountered during such a period.

This future price range for each investment candidate is clearly divided into upside and downside prospects by its current market price. We note how much of this entire predicted price range is between today’s market quote and the low-end perspective, the downside exposure. We label this % from the range as range index [RI] and note it in the column [G] of Figure 2. It is used to identify and average all prior IRs of similar size as an appropriate sample of subsequent market outcomes in the column [L]as a proportion of all price range predictions for the security over the past 5 years of trading days [M].

With these samples, scaled individually based on relevant results from each candidate’s previous sample, we can now make appropriate direct comparisons of responses to the following questions:

What size Can a capital gain be expected from this stock in the coming months? [ I ] Out of the sample, what are the odds (what is the probability) which one will be profitable? How longon average, [J] could this be necessary for a typical sample of exploitation to result in a disciplined termination? During this average holding period, what a bad could a temporary price drop be experienced? What credibility [N] is the current upside forecast [E] compared to what history has achieved [ I ]? Given [E] and [F]what is the current risk reward [T] report?

Items that attract attention should be placed in the column [E]the upside price % changes between [D] and [B]and (based on past predictions such as today’s) the likelihood that those predictions will materialize within the next 3 months: Column [H]Winning odds.

These odds are [L] Sample size past forecasts with both up and down price swing balances like today, denoted by [G] Range index, where the numeric value indicates the proportion in % of the whole [B] for [C] range is between [D] and [C].

We take those further [H] odds, and their complement, 100 – H, as price decline weights Sample risk experiments [L] in his various attempts to achieve [E] rewards, as shown in [ I ]. The net of this combination, as [O] + [P] = [Q]is set to RETURN RATE measured in “basis points per day” [R] by [Q] / [J], where one basis point = 1/100th of a percent. In other words, a % of a %.

these [R] the column measures provide a universal means of comparison for investment capital attractiveness, so the rows in Figure 2 are all ranked, with GSHD ranked first.

Given that we are faced with a decision in the inevitable uncertainty of the future, no collection of answers or actual results can be expected to prove perfection. But overall, they should help investors tailor their candidate choices to best determine how well the data leads each investor to the most satisfying results, most of the time.

When the objective is to find among the candidates in Figure 2 the largest, fastest and most likely capital gain over the next 3 months with the least amount of intermediate price decline distress, it seems that the logical choice either with GSHD.

Recent Trends in GSHD Price Range Predictions

picture 3

Daily forecast of the MM price range over the last 6 months

(used with permission)

With historical odds for profitable experience of 9 out of 10 and previous experience of less than 2 months (over 21 market days), the prospect of high triple-digit win rates is powerful compared to other investment alternatives in the insurance industry and competitive when compared to the averages of the top 20 of a large population of price forecasts.

A better perspective comes from weekly copies of MM forecasts over the past two years.

Figure 4

2-Year MM Price Range Weekly Forecast

used with permission


Comparing these investment candidates to choose the best prospect for short-term capital gain, Goosehead Insurance, Inc. seems to be a much better fit than all the others.

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