HealthEquity, Inc. (HQY): A Bull Case Theory

We came across a bullish thesis on HealthEquity, Inc. (HQY) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on HQY. HealthEquity, Inc. (HQY)’s share was trading at $94.48 as of March 10^th. HQY’s trailing and forward P/E were 86.72 and 25.97 respectively according to Yahoo Finance.

Owning quality equities means prioritizing businesses with strong fundamentals, and one key metric for assessing quality is Annual Recurring Revenue (ARR). Companies with high ARR percentages generate a consistent stream of revenue, making them more resilient and predictable. Amid the current market pullback, several stocks stand out due to their high ARR and financial robustness.

HealthEquity (HQY), a leader in healthcare financial solutions, exemplifies this strength. Specializing in Health Savings Accounts (HSAs), the company offers a cloud-based platform that helps individuals and employers optimize healthcare spending and manage tax-advantaged savings. With a market cap of $8.3 billion, HQY demonstrates impressive financial metrics: an ARR percentage of 84%, a three-year revenue CAGR of 15.8%, a 65.3% gross margin, and a free cash flow margin of 29.5%. Additionally, its three-year average return on invested capital stands at 3.43%, with net debt of $0.8 billion and a stock beta of 0.62. Investors should look into this stock as a potential investment by conducting their due diligence, as these indicators highlight its stability and strong positioning for long-term growth, especially in uncertain markets.

HealthEquity, Inc. (HQY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held HQY at the end of the third quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of HQY as an investment, our conviction lies in the belief that some 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 HQY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.