We recently published a list of 10 Best Medical Stocks to Buy Now. In this article, we are going to take a look at where UnitedHealth Group Incorporated (NYSE:UNH) stands against other best medical stocks to buy now.
Navigating the Healthcare Landscape: Investment Opportunities and Growth Trends
The medical and healthcare industry is one of the largest globally, with a steady demand for products and services due to the biological nature of humans. Stocks like Pfizer Inc. (NYSE:PFE) and Tenet Healthcare Corporation (NYSE:THC) are among the biggest in the world, benefiting from trends that arise during crises like the coronavirus pandemic. Following the pandemic’s rapid spread in 2020, investors were eager to identify the best medical stocks to navigate the global healthcare crisis.
This industry is highly capital-intensive and competitive, encompassing various subsectors, including pharmaceutical companies, healthcare plan providers, medical equipment manufacturers, and hospitals. While healthcare plan providers and pharmaceutical firms often capture consumer attention, hospitals tend to be overlooked, despite their status as publicly traded entities. According to McKinsey, the medical industry’s overall profits are projected to grow at a compound annual growth rate (CAGR) of 4%, increasing from $654 billion in 2021 to $790 billion by 2026. Notably, the hospital sector is expected to grow at a remarkable CAGR of 12.5%, reaching $2 trillion by 2028. Similarly, the pharmaceutical manufacturing segment, valued at $358 billion in 2020, is forecasted to surge to $1.2 trillion by 2030, reflecting a CAGR of 13%.
Over time, medical companies such as Pfizer and Moderna, Inc. (NASDAQ:MRNA), a biotechnology company based in Cambridge, Massachusetts, were among the most sought-after due to their vaccines. On the stock market, Moderna’s shares increased by an astounding 429% between December 2019 and September 2021. This outcome demonstrates that even modest wagers placed at the ideal moment can provide investors from all backgrounds with large returns. During the same period, Pfizer’s stock saw a more moderate 50% gain; nevertheless, the gap in gains is comprehensible given that Pfizer currently has a market value of more than four times that of Moderna, at $155 billion.
Our Methodology
For our methodology, we first sifted through the US pharmaceutical, medical devices, and healthcare ETFs and selected stocks that were weighted the highest. After choosing these stocks, we ranked them based on their total number of hedge fund holders as of Q2 2024.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
A senior healthcare professional giving advice to a patient in a clinic.
UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
UnitedHealth Group Incorporated (NYSE:UNH), based in Minnetonka, Minnesota, is a leading U.S. multinational focused on managed healthcare and insurance, operating through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx.
Deutsche Bank reiterated its Buy rating on UNH, raising the price target to $632. This follows UnitedHealth’s 6.4% revenue growth to $98.8 billion, despite challenges like a cyberattack and regulatory changes. The company also reduced expenses by $650 million year-over-year.
The Q2 2024 investor letter from Invesco Distributors, Inc. had a comment on UnitedHealth Group Incorporated (NYSE:UNH). This is what it stated:
“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.”
Analysts are also bullish on UNH giving it a Strong Buy rating. 21 analysts set a 12-month average price target of $625.39 for UnitedHealth, with estimates ranging from $591.00 to $680.00, indicating a potential 8.76% rise from the current price of $575.00.
Overall, UNH ranks 1st on our list of best medical stocks to buy now. While we acknowledge the potential of UNH as an investment, 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 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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Disclosure: None. This article is originally published at Insider Monkey.
