5 Best Health Insurance Stocks to Buy

1. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Shareholders: 116

Easily topping the list of the best health insurance stocks to buy is UnitedHealth Group Incorporated (NYSE:UNH), which hit an all-time high in hedge fund ownership during Q1 and ranks as one of the top 15 stocks among hedge funds as of March 31. Rajiv Jain’s GQG Partners, Andreas Halvorsen’s Viking Global, and Boykin Curry’s Eagle Capital Management all have substantial positions in UNH and greater than 4% 13F exposure to the stock.

UnitedHealth Group Incorporated (NYSE:UNH), which serves more than 150 million customers, has more than tripled its revenue over the past decade to just over $324 billion last year. And despite being the biggest player in the industry, analysts project UnitedHealth to grow earnings at a higher rate than its peers over the next five years. That UNH shares are trading fairly close to their 52-week lows makes this a great opportunity to grab a premium name in the health insurance space at a discount.

The Alger Spectra Fund believes UnitedHealth Group Incorporated (NYSE:UNH)’s fundamentals and growth outlook remain solid despite some short-term market trepidation towards the stock, as the fund discussed in its Q1 2023 investor letter:

“UnitedHealth Group Incorporated (NYSE:UNH) is an integrated healthcare benefits company uniquely positioned to address rising healthcare costs for its customers, due to its vertical integration, size, and scale. The Optum health benefits services unit, which accounts for approximately 45% of the company’s operating earnings, in our view, has the potential to grow even further as customers look for ways to manage rising healthcare costs. During the period, shares detracted from performance due to several factors: 1) many 2022 healthcare winners with shorter duration profiles and persistent earnings profiles, such as UnitedHealth Group. underperformed in the first quarter of 2023, 2) uncertainty surrounding Medicare Advantage reimbursement levels from the Federal government in 2023, which will be determined later in the year, and 3) increased regulatory scrutiny in the form of potential Medicare Advantage audits across the industry. While these concerns have impacted UnitedHealth in the near-term, we believe company fundamentals remain intact given its large scale business model, competitive advantages, and medium to long-term growth prospects.”

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