In this article, we will analyze the 10 Best Health Insurance Stocks to Buy.
Health insurance remains a contentious issue in the United States, where many people struggle to afford basic medical care. Although widely seen as essential, it remains inaccessible to many Americans. Despite the availability of public and private health insurance options, individuals often find themselves between qualifying for federal assistance and affording private insurance, leaving many without coverage. On that front, the Kaiser Family Foundation reports that 64.2% of uninsured non-elderly adults (ages 18 to 64) cite high costs as the primary reason for not having health insurance.
Conversely, private insurance, primarily provided through employers, remains the most common form of coverage in the U.S., with around 60% of Americans insured this way—roughly three times the number covered by Medicaid. The number of Americans with private health insurance began gradually increasing in 2013 after a sharp decline in the late 1990s and early 2000s, with coverage averaging around 61% of the population from 2016 to 2023. This rise has boosted revenues for private insurers in recent years.
As of 2023, the U.S. health insurance exchanges, established under the Affordable Care Act (ACA) in 2014, are marking their tenth year in operation. Over the past decade, the individual market has seen notable fluctuations in insurer participation, pricing, and plan options. With a recent surge in exchange enrollment, commercial insurers that previously avoided these marketplaces may need to reassess, as exchanges have become a vital part of health coverage. That said, this unprecedented growth may be temporary. The return of the subsidy cliff—if enhanced subsidies are not renewed in 2025—could reverse some of the progress. The 2024 election results may also influence the future of ACA coverage and subsidies, bringing potential changes under scrutiny.
Global consulting firm McKinsey reports that health insurers could gain significant advantages by fully integrating AI and automation across their business processes. The firm estimates that for every $10 billion in revenue, insurers could save $150 million to $300 million in administrative costs and $380 million to $970 million in medical expenses. Additionally, these technologies could generate an extra $260 million to $1.24 billion in revenue.
The global health insurance industry is poised for significant growth, with projections from Straits Research forecasting a Compound Annual Growth Rate (CAGR) of 9.8% from 2024 to 2032. By 2032, the market is expected to reach a value of $176.04 billion.
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Our Methodology
To create our list of top health insurance stocks to buy, we first compiled an initial list of 20 health insurance stocks by sifting through ETFs, stock screeners, and online rankings. We then used Insider Monkey’s Q2 2024 database to identify the 10 stocks most widely held by hedge funds. The list is sorted in ascending order of the hedge fund sentiment for each stock.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. 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).
10. Globe Life Inc. (NYSE:GL)
Number of Hedge Fund Holders: 33
Globe Life Inc. (NYSE:GL) offers a wide range of products and services across various segments, including life insurance, supplemental health insurance, annuities, and investments. The company targets the middle-income market through multiple distribution channels, including direct-to-consumer platforms and agency networks.
In its second-quarter 2024 earnings report, Globe Life Inc. (NYSE:GL) posted a 20% increase in net income, totaling $258 million, surpassing both analysts’ estimates and consensus expectations. This strong performance was driven by growth in premiums, higher underwriting and investment income, and a reduction in shares due to buybacks. Following the results, CFRA upgraded Globe Life’s shares from Sell to Hold and raised the price target to $92 from $68, while Piper Sandler maintained an Overweight rating and adjusted its price target to $106 from $105.
Although Globe Life Inc. (NYSE:GL) faces financial misconduct allegations, the company is cooperating with investigations from the SEC and DOJ. Additionally, it is implementing capital management strategies, aiming for a $1.3 billion authorization by the end of 2025.
In the first quarter of 2024, 33 hedge funds held positions in Globe Life Inc. (NYSE:GL), with investments totaling $492.2 million.
9. MetLife, Inc. (NYSE:MET)
Number of Hedge Fund Holders: 37
Metropolitan Life Insurance Company, commonly known as MetLife Inc. (NYSE:MET), is one of the largest global providers of insurance, annuities, and employee benefit programs, serving over 90 million customers across more than 60 countries. The company is approaching the completion of its “Next Horizon” strategy and recently introduced “New Frontier,” a new five-year plan focused on accelerating growth and boosting returns.
In its recent earnings call, MetLife, Inc. (NYSE:MET) reported strong performance for the second quarter of 2024, with earnings up 18% year-over-year to $1.6 billion. A major driver of this growth was the Group Benefits segment, which experienced a 43% increase in adjusted earnings due to favorable underwriting and higher variable investment income. While Retirement and Income Solutions (RIS) saw a slight 2% decline in earnings, MetLife maintained strong recurring cash flow and solid capital positions, with $4.4 billion in cash and liquid assets as of the end of June.
Barclays recently initiated coverage on MET with an Overweight rating and a price target of $91. The firm’s analysis emphasized MetLife’s potential for sustained earnings growth, driven by its strong Group Benefits business in the U.S. and Mexico, along with its expanding presence in Asia, particularly outside Japan.
As of Q2 2024, 37 hedge funds held long positions in MetLife, Inc. (NYSE:MET), with a combined stake of $1.09 billion in the insurance giant. The largest investor, Richard S. Pzena’s Pzena Investment Management, owns a $677 million stake, totaling 9.64 million shares.
8. Molina Healthcare Inc. (NYSE:MOH)
Number of Hedge Fund Holders: 45
Molina Healthcare Inc. (NYSE:MOH) is a U.S.-based managed care company dedicated to providing affordable health insurance products, with a focus on underserved communities. It offers Medicaid, Medicare, and marketplace plans to low-income individuals and families.
In Q2 2024, Molina Healthcare Inc. (NYSE:MOH) reported earnings of $5.86 per share, meeting analysts’ expectations. The company reaffirmed its full-year guidance, projecting earnings of at least $23.50 per share and premium revenue of $38 billion. Following these results, TD Cowen raised its price target for the MOH stock from $351 to $378, maintaining a Buy rating.
Moreover, Molina Healthcare Inc. (NYSE:MOH) undertook strategic growth initiatives back in June, including acquiring ConnectiCare, a leading health plan in Connecticut. This acquisition, which serves 140,000 members across Marketplace, Medicare, and certain commercial products, strengthens Molina’s position by adding a recognized brand and a statewide provider network.
In Q2 2024, Molina Healthcare, Inc. (NYSE:MOH) saw its shares held by 45 hedge funds, up from 34 in the previous quarter. The total value of these holdings amounted to $1.02 billion. Jim Simons’ Renaissance Technologies stood out as the largest shareholder for the quarter, with a stake valued at $282.3 million.
7. Centene Corporation (NYSE:CNC)
Number of Hedge Fund Holders: 48
Centene Corporation (NYSE:CNC), headquartered in St. Louis, Missouri, is a publicly traded managed care company that serves as an intermediary for both government-sponsored and privately insured healthcare programs, with a primary focus on the Medicaid market.
Wells Fargo recently updated its outlook on Centene Corporation (NYSE:CNC), raising the price target from $81 to $93 while maintaining its Overweight rating, signaling confidence in the stock’s investment potential. The revised price target is based on Wells Fargo’s analysis of two possible earnings scenarios for CNC. In the first scenario, assuming the continuation of enhanced exchange subsidies, the firm applied a 13x multiple to Centene’s projected 2026 earnings per share. In the second scenario, should the enhanced subsidies expire, Wells Fargo anticipates a $0.70 EPS headwind, which would be partially offset by $2.00 per share in statutory capital.
Centene Corporation (NYSE:CNC) posted strong results for the second quarter, reporting an adjusted diluted EPS of $2.42, a 15% year-over-year increase. This solid performance was primarily driven by effective marketplace execution, despite challenges in Medicaid due to redeterminations. Looking ahead, the health insurer has raised its full-year premium and service revenue expectations to a range of $141 billion to $143 billion. Additionally, the company is targeting 2025 revenue between $14 billion and $16 billion, focusing on opportunities in duals, Heidi, and Fidei programs.
As of Q2 2024, 48 hedge funds tracked by Insider Monkey held stakes in Centene Corporation (NYSE:CNC). Among the top investors, AQR Capital Management owned a stake valued at over $296.4 million.
6. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 60
CVS Health Corporation (NYSE:CVS) is a U.S.-based healthcare company that operates a wide network of retail pharmacies and clinics across the country. Its key brands include CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider.
Earlier this August, TD Cowen maintained a Hold rating on CVS Health Corporation (NYSE:CVS) following the company’s second-quarter 2024 performance, keeping a price target of $59.00. After CVS revised its yearly outlook, TD Cowen adjusted its 2024 earnings per share estimate to $6.53, aligning with the management’s updated guidance of $6.40 to $6.65. For 2025, the firm projects an 18% year-over-year increase, with EPS rising to $7.62. The 2025 projection factors in a roughly 110-basis-point margin improvement in the Medicare Advantage segment, within the company’s targeted range of 100 to 200 basis points. It also accounts for a 5% decline in Medicare Advantage membership and $500 million in anticipated cost savings.
The company has expanded its Aetna medical membership through CVS pharmacies to 9 million, reflecting an 8% increase. Additionally, Caremark now covers 13.8 million Aetna members, marking a 13% growth.
As of the end of the second quarter in 2024, 60 hedge funds tracked by Insider Monkey, out of a database of 912, held positions in CVS Health Corporation (NYSE:CVS).
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction.”
5. The Cigna Group (NYSE:CI)
Number of Hedge Fund Holders: 66
The Cigna Group (NYSE:CI) and its subsidiaries focus on providing insurance and related services in the United States, including pharmacy benefits, home delivery pharmacy, and specialty pharmacy distribution. Under the Cigna Healthcare brand, the company provides a range of government, employer-based, and individual health plans. However, it saw a “year-to-date decrease in individual and family plan customers” due to targeted pricing adjustments in specific regions. As a result, the company reported 19 million medical customers, down from 19.5 million last year. Despite this, Cigna Healthcare’s income from operations and overall revenues grew by 3%, driven by premium hikes, operational efficiencies, and investment income, which helped offset rising medical care costs.
The Cigna Group (NYSE:CI) reported strong earnings for the second quarter of 2024, with total revenue reaching $60.5 billion—a 25% increase from the previous year, while the adjusted EPS grew by 10% year-over-year to $6.72. This impressive growth spanned multiple business segments, including Evernorth Health Services and Care Services, with Evernorth’s adjusted income rising 12%.
In addition, Jefferies raised its price target for CI from $402 to $422, maintaining a Buy rating. This adjustment followed discussions with Cigna’s CFO Brian Evanko and Investor Relations lead Ralph Giacobbe, who pointed out key growth drivers, such as the expected impact of several specialty drugs losing exclusivity by 2030, which could benefit Cigna’s Specialty business. They also highlighted the company’s ability to adapt its Express Scripts revenue streams to regulatory changes.
According to Insider Monkey’s database, the number of hedge funds holding stakes in The Cigna Group (NYSE:CI) increased to 66 in Q2 2024, up from 61 in the previous quarter, with total stakes valued at over $2.77 billion. Alongside AQR Capital, Glenview Capital also emerged as one of the company’s top stakeholders during the quarter.
4. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 71
Humana Inc. (NYSE:HUM) focuses on improving health and wellness by offering a wide range of healthcare benefits to its medical and specialty members. These services include fully-insured medical and specialty health insurance, covering vision, dental, and supplemental health benefits, as well as administrative services only (ASO) products for individuals and employer groups.
In the second quarter, Humana Inc. (NYSE:HUM) exceeded analyst expectations with an adjusted earnings per share of $6.96, surpassing the forecasted $5.87 by $1.09. The company also reported quarterly revenue of $29.54 billion, outperforming the consensus estimate of $28.53 billion.
RBC Capital reaffirmed its Outperform rating on Humana Inc. (NYSE:HUM) and increased its price target from $385 to $400. This update followed a detailed analysis of the company’s Q2 performance and management’s insights on seasonal trends affecting the latter half of the year. While the company expects a net reduction of approximately 560,000 individual Medicare Advantage (MA) members in the next year—representing a 10% attrition rate—RBC Capital remains optimistic about Humana’s outlook.
As of Q2 2024, Insider Monkey reported that 71 out of the 912 hedge funds they track held positions in Humana Inc. (NYSE:HUM). Among the leading hedge fund investors, Eagle Capital Management stood out with a significant stake in the company, valued at over $1.2 billion.
Diamond Hill Mid Cap Strategy stated the following regarding Humana Inc. (NYSE:HUM) in its Q2 2024 investor letter:
“Other top Q2 contributors included Humana Inc. (NYSE:HUM) and Boston Scientific Corporation. Shares of health insurance company Humana rebounded from their recent downturn, which was tied to investors’ concerns about weaker-than-expected Medicare Advantage rates for 2025 and was the byproduct of an overall difficult operating environment.”
3. Elevance Health, Inc. (NYSE:ELV)
Number of Hedge Fund Holders: 73
Elevance Health, Inc. (NYSE:ELV), formerly known as Anthem, Inc., is a leading health benefits company in the U.S., operating Blue Cross and Blue Shield plans in 14 states with licenses to sell health insurance nationwide. The company’s stock recently reached a record high of $555.42.
For the second quarter of 2024, Elevance Health, Inc. (NYSE:ELV) reported GAAP diluted earnings per share of $9.85 and adjusted diluted earnings per share of $10.12, reflecting a 12% year-over-year increase. The company ended the quarter with 45.8 million members, largely impacted by a decline in Medicaid enrollment. Looking ahead, Elevance Health is targeting an operating margin of 6.5% to 7% by 2027 and expects to achieve upper single-digit to low double-digit growth in annual operating earnings over time.
As of the end of the June 2024 quarter, 73 hedge funds tracked by Insider Monkey held stakes in Elevance Health, Inc. (NYSE:ELV), a decrease from 79 in the previous quarter. The collective value of these stakes exceeds $5.39 billion.
Artisan Select Equity Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q2 2024 investor letter:
“The top contributors to performance for the quarter were Alphabet, Lam Research and Elevance Health, Inc. (NYSE:ELV). Elevance shares rose 5% during the quarter. The business has been performing well and has delivered good profit growth this year, despite a flat top line. It has largely navigated the challenges related to Medicaid redeterminations, which have caused temporary volatility in membership and health care utilization levels. Its vertical integration strategy is gaining traction, with strong revenue and profit growth at its Carelon Services business. Elevance’s shares are trading at 13X earnings, which is a very attractive investment proposition for a durable business that expects long-term earnings growth of over 12%.”
2. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 89
The Progressive Corporation (NYSE:PGR) is a leading U.S. insurer, providing auto and health insurance solutions.
In its Q2 2024 financial report, The Progressive Corporation (NYSE:PGR) exceeded analysts’ expectations for adjusted earnings per share, reporting $2.48 per share—$0.45 higher than the projected $2.03. However, the company slightly missed revenue estimates, bringing in $17.21 billion versus the expected $17.54 billion.
Goldman Sachs recently raised its price target for The Progressive Corporation (NYSE:PGR) from $262 to $280, maintaining a Buy rating. This revision is based on positive developments such as stronger PIF (policies in force) growth and a better-than-expected underlying loss ratio in the personal auto segment. These gains were partially offset by a higher expense ratio for personal lines. Goldman Sachs also expressed confidence in the sustainability of favorable loss cost trends, leading to a 13% increase in EPS estimates for 2024, and a 3% boost for 2025 and 2026.
By the end of Q2 2024, 89 hedge funds tracked by Insider Monkey held positions in The Progressive Corporation (NYSE:PGR), with Viking Global, led by Andreas Halvorsen, being the largest stakeholder with a $832.2 million stake.
Parnassus Investments, an investment management company, released first quarter 2024 investor letter and mentioned The Progressive Corporation (NYSE:PGR). Here is what the fund said:
“The Progressive Corporation (NYSE:PGR) shares appreciated as investors reacted well to the insurer’s latest financials, including higher-than-expected-growth in net premiums. The company’s consistently profitable underwriting, scale advantages and strong execution are becoming more evident to investors as it continues to gain market shares.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
UnitedHealth Group Incorporated (NYSE:UNH), based in Minnetonka, Minnesota, is a leading U.S. multinational corporation specializing in managed healthcare and insurance services. The company operates as a for-profit entity and is divided into four key segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx.
Deutsche Bank recently reiterated its Buy rating on UNH, raising the stock’s price target to $632. This upgrade follows UnitedHealth’s report of a 6.4% year-over-year revenue increase, reaching $98.8 billion. Despite facing challenges such as a cyberattack and regulatory changes, the company managed to cut selling, general, and administrative expenses by $650 million compared to the previous year.
As of Q2 2024, 114 investors held optimistic positions in UnitedHealth, with total stakes amounting to $12.54 billion. Fisher Asset Management was the largest shareholder, holding a position valued at $1.57 billion as of June 30.
Invesco Distributors, Inc. commented on UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter. Here is what it said:
“UnitedHealth Group Incorporated (NYSE:UNH): Like many managed care providers, United Health has come under pressure from rising medical costs and higher-than-expected utilization. The stock is currently undervalued based on our analysis. We view the company as a high-quality compounder with secular growth opportunities in the managed care segment. The US Presidential election may cause additional near-term uncertainty, but we believe United Health will be able to rebound once pricing and utilization issues normalize.”
While we recognize the potential of UNH as an investment, we believe certain deeply undervalued AI stocks offer greater prospects for higher returns in a shorter period. If you’re seeking an AI stock with even more promise than those on our list and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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