1. UnitedHealth Group Incorporated (NYSE:UNH)
Forward P/E Ratio: 20.76
Earnings Growth This Year: 19.70%
Number of Hedge Fund Holders: 114
UnitedHealth Group Incorporated (NYSE:UNH) is a leader when it comes to top healthcare insurance in the United States. It not only serves more than 75 million people worldwide through various insurance plans but has beaten the industry with its net margins.
The company has grown its revenue by more than 12% and net income by around 10% during the last decade and is the best cheap blue chip stock to invest in now. The core business of UnitedHealth Group Incorporated (NYSE:UNH) is concerned with offering a variety of health benefit plans designed to make healthcare more accessible to everyone. It has its strategic edge originating from another arm of business called Optum, which provides technology and data analytics services for healthcare and pharmaceutical companies.
In fact, during the second quarter of 2024, Optum led the company revenue to a $6 billion growth year-over-year. Growth for its UnitedHealthcare segment was not slow at all, consumers served under various plans grew to 2.3 million on a year-to-date basis.
For established businesses cash flows from operations are often a main source of income and so is the case for UnitedHealth Group Incorporated (NYSE:UNH). Its cash flow from operations was $6.7 billion during the quarter or in other words 1.5x the net income.
These robust financials topped with its cheap valuation make it a compelling investment opportunity. UNH is trading at 21 times forward earnings while the market average sits close to 24. Moreover, its earnings are also expected to grow by 20% to reach $27.71.
Invesco Growth and Income Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter:
“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 acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) to grow, 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 a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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