Molina Healthcare, Inc. (MOH): A Bull Case Theory

We came across a bullish thesis on Molina Healthcare, Inc. (MOH) on ValueInvesting subreddit page by Traditional-Jump6145. In this article, we will summarize the bulls’ thesis on MOH. Molina Healthcare, Inc. share was trading at $289.46 as of Oct 17^th. MOH’s trailing and forward P/E were 15.88 and 10.85 respectively according to Yahoo Finance.

Molina Healthcare (MOH) is a managed care company that provides health insurance services primarily through government-funded programs such as Medicaid and Medicare. The company has seen strong growth driven by its focus on providing affordable healthcare solutions.

Molina generates revenue by offering health insurance plans, predominantly in Medicaid and Medicare markets. These programs are funded by the government, and Molina receives payments to manage healthcare services for enrolled individuals. As Medicaid and Medicare enrollment grows, Molina stands to benefit from increased funding for these programs. The company’s revenue growth aligns with broader trends in rising healthcare costs, projecting significant expansion due to an increasing reliance on government-backed insurance.

Investing in Molina presents a compelling case as the projected growth rates of Medicare and Medicaid are 7.4% and 5.2% annually until 2032—are expected to drive significant tailwinds. As the number of eligible individuals grows, Molina’s revenue opportunities expand. With about 60% of the Medicare population expected to enroll by 2030, Molina is well-positioned for future revenue gains.

Molina’s performance has been impressive, with a tenfold increase in stock price since 2014 and a year-over-year revenue growth of 17%. However, while revenues have climbed to all-time highs, net income has recently shown a downward trend. Still, Molina’s 2024 earnings per share guidance of at least $23.50, translating to a P/E ratio of 14.7, suggests strong profitability prospects. The company’s focus on Medicaid and Medicare and its strategic positioning in a growing sector create a solid foundation for sustained growth.

Molina Healthcare, Inc. is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held MOH at the end of the second quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of MOH 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 MOH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

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