1. Elevance Health, Inc. (NYSE:ELV)
Number of Hedge Fund Holders: 67
Elevance Health, Inc. (NYSE: ELV) is a leading health insurance provider in the U.S., offering health insurance plans and related services to individuals, employers, and government programs like Medicare and Medicaid. The company generates revenue by collecting premiums and managing healthcare costs through its provider network, serving approximately 117 million people across various health plans and services. ELV tops our list of the best oversold stocks in the healthcare sector.
Despite challenges in Q3 2024, Elevance Health, Inc. (NYSE: ELV) reported strong financial fundamentals, with total operating revenue of $44.7 billion (up 5% year-over-year) and adjusted diluted earnings per share of $8.37. However, the company faced elevated medical costs in its Medicaid business, leading to a revised full-year 2024 outlook of approximately $33 adjusted diluted EPS. Looking ahead, the company expects strong revenue growth in 2025, projecting high single-digit percentage increases and at least 12% annual growth in adjusted diluted EPS. The company is expanding strategically with plans to enter three new states for individual exchange offerings, acquire Kroger Specialty Pharmacy, and expand its individual and family ACA plans in Florida, Maryland, and Texas.
On October 1, Elevance announced its 2025 Medicare Advantage Plans, offering flexible options with personalized benefits to nearly 40.3 million eligible consumers in 23 states. The company’s affiliated health plans currently serve 2.9 million Medicare members, and in 2025, Elevance aims to provide personalized care beyond healthcare.
Artisan Partners’ 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 healthcare 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%.”
Overall, ELV ranks first among the 10 oversold healthcare stocks to invest in. While we acknowledge the potential of healthcare companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ELV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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