In this article, we discuss the top 5 winners of the Inflation Reduction Act 2022. If you want to see some of the other winners in this field, check out The Inflation Reduction Act 2022: Top 10 Winners.
5. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 57
Enphase Energy, Inc. (NASDAQ:ENPH) is a California-based company that offers home energy solutions for the solar photovoltaic industry in the United States and internationally. The stock has gained over 57% in the last month as of August 12, 107.30% in the last six months, and about 62% year-to-date.
On August 11, KeyBanc analyst Sophie Karp raised the price target on Enphase Energy, Inc. (NASDAQ:ENPH) to $363 from $230 and reiterated an ‘Overweight’ rating on the shares. As the analyst expects the Inflation Reduction Act to mainstream larger distributed generation adoption, Enphase Energy, Inc. (NASDAQ:ENPH) should benefit from expanding the market. While the analyst believes that in the short-term Enphase Energy, Inc. (NASDAQ:ENPH) might lag given investor sentiment, she sees solid top-line and earnings growth as well as increasing gross margins from its IQ8 micro-inverters to drive its outperformance in the intermediate to long-term. Enphase Energy, Inc. (NASDAQ:ENPH) remains one of the best positioned companies in her Alternative Energy coverage, the analyst added.
According to Insider Monkey’s data, 57 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH) at the end of the first quarter of 2022, up from 50 funds in the preceding quarter. Bruce Emery’s Greenvale Capital is a significant stake holder in the company, with 500,000 shares valued at about $101 million.
Here is what the ClearBridge Investments Sustainability Leaders Strategy had to say about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q1 2022 investor letter:
“Enphase Energy (NASDAQ:ENPH) is a key solar holding that should be able to take advantage of greater incentives for solar installations in many geographies. The company was also a strong contributor for the quarter, overcoming pressures of a higher discount rate on their strong projected future earnings, raw material inflation and supply chain challenges as their long-term value was reaffirmed.”
4. Centene Corporation (NYSE:CNC)
Number of Hedge Fund Holders: 60
Centene Corporation (NYSE:CNC) is a Missouri-based multinational healthcare company that offers programs and services to under-insured and uninsured individuals in the United States. The company’s Managed Care division provides health coverage to patients through state subsidized programs, including Medicaid, the State children’s health insurance program, foster care, and medicare-medicaid plans. The stock has climbed about 16% year-to-date as of August 12. Centene Corporation (NYSE:CNC) will benefit from the Inflation Reduction Act, which includes a three-year extension of enhanced financial aid for insurers.
On July 26, the company posted above consensus earnings and revenue for Q2 2022, and also raised its guidance for the year. The company expects full year 2022 adjusted EPS to range between $5.60 to $5.75, versus a consensus EPS estimate of $5.61. Centene Corporation (NYSE:CNC) anticipates total revenue of between $141.6 billion and $143.6 billion, compared to a consensus of $142.66 billion.
Barclays analyst Steve Valiquette reinstated coverage of Centene Corporation (NYSE:CNC) on July 28 with an ‘Overweight’ rating and a $107 price target after the company’s Q2 earnings presentation and the conclusion of the PANTHERx divestiture. Centene Corporation (NYSE:CNC) has been working to enhance margins and add shareholder value while improving the managed care experience for members, the analyst told investors.
According to Insider Monkey’s Q1 data, 60 hedge funds were long Centene Corporation (NYSE:CNC), up from 53 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the leading stakeholder of the company, with 7.80 million shares worth over $657 million.
FPA Capital Fund highlighted a few stocks in its Q3 2020 investor letter and Centene Corporation (NYSE:CNC) was one of them. Here is what it said:
“CNC was the Fund’s 2nd worst performer for the quarter. The company is a managed care organization (discussed in more detail in prior commentaries). The stock declined on election uncertainty and on the increased likelihood that the Supreme Court might strike down the Affordable Care Act due to the death of Supreme Court Justice Ginsburg. CNC does have the headline risk, but the stock is trading at 10x 2021 price to earnings multiple versus its long term historical average of 16x. 6 Its COVID-19 costs appear to be in line with expectations and the worst long term effect from a repeal of the Affordable Care Act is estimated to be a 10% hit to earnings. 7 We believe that any likely political scenarios would not cause a major long-term disruption to the company while its valuation appears to price in a much more dire scenario.”
3. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) provides insurance products and services in the United States. The company offers pharmacy benefits management, health insurance plans, care delivery and management, and intelligence solutions to employers, government organizations, and healthcare providers. The stock has gained about 24% year-to-date and as insurers will get huge funding from the Inflation Reduction Act, Cigna Corporation (NYSE:CI) stands to be one of the biggest winners. The company posted above-consensus EPS and revenue in Q2 2022, and its total customer relationships have grown by 3% year-to-date to 191.3 million. Cigna Corporation (NYSE:CI) also raised its FY2022 outlook.
On July 27, Cigna Corporation (NYSE:CI) declared a $1.12 per share quarterly dividend, in line with previous. The dividend is distributable on September 22, to shareholders of the company as of September 7. The company’s stock delivers a dividend yield of 1.55% as of August 12.
UBS analyst Kevin Caliendo raised the price target on Cigna Corporation (NYSE:CI) to $330 from $310 on August 8 and reaffirmed a ‘Buy’ rating on the shares. The stock has outperformed its competitors since the posting of Cigna’s strong Q2 earnings and its lower medical loss ratio forecast for 2022, the analyst told investors. If Covid-19 and flu cases remain insignificant in the second half of the year, the analyst sees “upside to 2022 estimates”.
According to Insider Monkey’s data, 63 hedge funds were long Cigna Corporation (NYSE:CI) at the conclusion of the first quarter of 2022, up from 53 funds in the prior quarter. Larry Robbins’ Glenview Capital is the largest stakeholder of the company, with roughly 1.6 million shares worth $382.4 million.
Here is what the Davis Opportunity Fund had to say about Cigna Corporation (NYSE:CI) in its Q4 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, UnitedHealth Group, Viatris and Quest Diagnostics.”
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Tesla, Inc. (NASDAQ:TSLA) is a Texas-based automotive company that designs and manufactures electric vehicles, energy generation solutions, and battery systems. Although Tesla, Inc. (NASDAQ:TSLA) has manufacturing facilities in China, the company has several plants in the United States, which makes it eligible for tax credits. However, Tesla, Inc. (NASDAQ:TSLA) will need to introduce more affordable EV variants such as the Model 3, given that EV companies will only be eligible for the Act’s provisions if their vehicles are priced under $55,000. Tesla, Inc. (NASDAQ:TSLA), which posted market-beating Q2 2022 results, will undoubtedly be one of the main beneficiaries of the Inflation Reduction Act 2022.
On August 8, Canaccord analyst George Gianarikas raised the price target on Tesla, Inc. (NASDAQ:TSLA) to $881 from $815 and maintained a ‘Buy’ rating on the shares. The analyst noted that although macroeconomic factors and the latest price hikes could materially affect order rates, he forecasts that Tesla, Inc. (NASDAQ:TSLA)’s EV momentum and competitive edge from manufacturing, materials procurement, and autonomy is safe for a while. He added that with further offerings in solar and energy storage, Tesla, Inc. (NASDAQ:TSLA) continues to be an American sustainability giant.
According to Insider Monkey’s data, 80 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA) at the end of Q1 2022, compared to 91 funds in the prior quarter. Cathie Wood’s ARK Investment Management is a prominent stakeholder of the company, with roughly 1.6 million shares worth $1.7 billion.
Here is what Grantham Mayo Van Otterloo & Co. LLC had to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 103
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational managed healthcare and insurance company. UnitedHealth Group Incorporated (NYSE:UNH) offers Medicaid plans, children’s health insurance and healthcare programs, dental benefits, and hospital and clinical services. It is one of the largest potential beneficiaries of the Inflation Reduction Act 2022.
On July 15, UnitedHealth Group Incorporated (NYSE:UNH) reported Q2 EPS of $5.57 and revenue of $80.33 billion, outperforming Wall Street estimates by $0.36 and $652.11 million, respectively. The company also boosted its FY22 EPS outlook based on its first-half performance and future growth predictions.
Mizuho analyst Ann Hynes raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $600 from $550 on August 10 and maintained a ‘Buy’ rating on the shares after the “strong” Q2 results. The analyst raised estimates due to the company’s solid business outlook.
Among the hedge funds tracked by Insider Monkey, 103 hedge funds were bullish on UnitedHealth Group Incorporated (NYSE:UNH) at the end of Q1 2022, up from 96 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the leading stakeholder of the company, with 2.90 million shares worth about $1.5 billion.
Here is what Wedgewood Partners had to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2022 investor letter:
“UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.”
You can also take a look at This Analyst Is Bearish on These 15 Retail Stocks Amid “Soft Landing” Expectations and 10 Best Dividend Stocks to Buy in 2022.
