This Little-Known Growth Stock Is Up 1,262% Since the Start of 2024. Here's Why It's Just Getting Started.

Core Insights - Root's stock has surged 1,262% since the start of 2024, reflecting significant progress in customer growth, policy writing, and improved underwriting capabilities [1][2] - The company has consistently exceeded analysts' earnings expectations, leading to a surprising profit in 2024 and establishing itself as a contender in the automotive insurance market [2] Company Overview - Root utilizes a disruptive approach to automotive insurance by pricing policies based on driving behavior rather than traditional demographics, employing telematics technology to track drivers [3][4] - Prospective customers use the Root app to monitor their driving behaviors, allowing the company to provide customized quotes based on individual habits [4] Underwriting Improvement - Root's underwriting has seen substantial improvement, with the combined ratio decreasing from 195% in 2022 to 133% in 2023, and finally achieving a combined ratio of 96.4% in 2024, indicating an underwriting profit for the first time [6][7] - This improvement resulted in a net income of $30.9 million in 2024, a significant turnaround from losses of $147 million and $298 million in 2023 and 2022, respectively [7][8] Business Growth - The number of policies in force reached 414,862, with premiums earned totaling $1.2 billion, nearly double the amount from 2023 [9] - Root operates in 35 states and has recently expanded into Minnesota, indicating further potential for growth as it can enter additional states to drive premium growth [11]