10 Blue-Chip Stocks to Buy at 52-Week Lows

2. Humana Inc. (NYSE:HUM)

52 Week Range: $276.80 – $530.54

Current Share Price: $279.45

Number of Hedge Fund Holders: 71

Market Capitalization as of September 30: $33.64 Billion

Humana Inc. (NYSE:HUM) is one of the best blue chip stocks to buy at 52-week lows as it continues to concentrate on Medicare plan offerings instead of private sector insurance. The company’s competitive edge stems from being a leading provider of Medicare Advantage plans, primarily serving the elderly.

Humana Inc. (NYSE:HUM) continues to be at the forefront of one of the fastest-growing segments of US medical insurance, given US demographic trends and the growing uptake of Medicare Advantage plans among eligible individuals.

The management has attributed disappointing financial results to rising inpatient utilization rates and Medicare Advantage medical costs in recent quarters. Nevertheless, Humana Inc. (NYSE:HUM) has made significant investments in Medicare Advantage, the government-funded program that provides senior citizens with health benefits as they age.

Because Medicare Advantage accounts for the majority of revenue, the company’s earnings are susceptible to higher utilization rates among seniors. Humana has managed these pressures by negotiating with providers and using clinical appropriateness despite rising inpatient costs.

Humana Inc. (NYSE:HUM)’s Medicare business has experienced a notable upswing, contributing to an exceptional performance in the second quarter of 2024 that exceeded forecasts. Revenues in the quarter were up by 10% to $29.5 billion, but earnings per share dropped to $5.62 from $7.66 a year ago in the same quarter.

The business maintained its guidance for benefit ratios and full-year adjusted earnings per share (EPS) for 2024, indicating a promising future for growth, especially in the Medicaid and CenterWell businesses. Moreover, Humana increased its revenue forecast by $3 billion due to growing membership.

Following the steep pullback, the stock trades at a discount relative to the industry standards with a price-to-earnings multiple of 13 while offering a 1.27% dividend yield.

As of Q2 2024, Insider Monkey reported that 71 out of the 912 hedge funds they track held positions in Humana Inc. (NYSE:HUM). Notably, Eagle Capital Management emerged as a leading hedge fund investor 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.”