1. UnitedHealth Group Inc. (NYSE:UNH)
Forward Price-to-Earnings Ratio: 18.45
Market Cap as of September 26: $531.17 billion
Number of Hedge Fund Holders: 114
UnitedHealth Group Inc. (NYSE:UNH) is a health insurance and services company that offers health insurance plans and health services. It is one of the largest health insurers in the US through its subsidiaries, including UnitedHealthcare, Optum, and OptumHealth, and is known for its focus on improving health outcomes and reducing costs through its integrated healthcare delivery systems.
The company uses its scale to gain a first-mover advantage in emerging drug markets, like GLP-1 weight loss treatments, with a vast network and lower costs giving it an edge. This extends to other innovative therapies, such as gene editing and advanced cancer treatments. It provides health coverage to 50 million Americans. The company is committed to community service, with professionals making 2 million+ home visits last year to identify health emergencies in patients.
It reported a 6.41% year-over-year revenue improvement for the second quarter of 2024, with an earnings per share value of $6.80. Revenue increased by $6 billion to $98.9 billion, driven by Optum and UnitedHealthcare. Customer growth in the US reached 29.6 million, up 2.3 million from the previous year. Optum, the company’s global healthcare services provider focused on data-driven care optimization, saw revenue grow by $6 billion to $62.9 billion.
Since 2011, the company’s revenue has more than tripled, increasing from just over $101 billion to nearly $372 billion by 2023. UnitedHealth Group Inc. (NYSE:UNH) has consistently performed well, even during tough economic times. The company is well-prepared to benefit from the rising demand for health insurance, driven by the expected population increase in the coming years.
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 growth potential of UnitedHealth Group Inc. (NYSE:UNH), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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