We recently published a list of 11 Best Beginner Stocks To Invest In Now. In this article, we are going to take a look at where UnitedHealth Group Incorporated (NYSE:UNH) stands against other best beginner stocks to invest in now.
The Downsides to Stocks Rallying Higher
Stocks in the United States are rallying high, but some strategists are eyeing a few risks. On December 5, Max Kettner, Chief Multi-Asset Strategist at HSBC, appeared in an interview on Yahoo Finance to discuss the market outlook heading into 2025. Kettner shared that investors and analysts alike hold extremely bullish expectations of the market in 2025. While that may likely be true, an extremely bullish market may pose a significant risk and have multiple downsides.
He stated that the market will likely see strong upsides on the earnings front, leading to higher yields, which will leave a question on the future of the cutting cycle and whether the Fed will have to commence a rate hike again. He emphasized that higher terminal rates will bring in bond volatility and impact nearly every risk asset in the market.
Speaking of positives, Kettner highlighted that the next few quarters exhibit pretty low growth expectations and earnings expectations for the S&P. He reiterated that with a much lower growth rate, the cutting cycle will be executed as planned. As for inflation, he highlighted the importance of super core inflation, also referred to as underlying inflation. He believes super core inflation is more likely to decline, especially in the first half of the year, adding that he is not as worried about inflation as he was almost three to four months ago.
Kettner stated that the next six to seven months will deliver a supportive market environment for equities in the S&P, especially for global equities. He also believes that the market will see a 12% to 13% upside in the next 12 months until the end of 2025. While Kettner remained inclined to tech stocks, he added that other sectors, such as industrials, will also see a “mini re-acceleration.”
He emphasized that the market rally will go beyond the S&P especially with the current “goldilocks” backdrop, high growth projections, and consensus expectations, benefiting other asset classes. Kettner shared that the ideal portfolio for investors will be tech stocks and a combination of stocks in other sectors, especially industrials and US banks. He added that these sectors are likely to benefit from regulatory changes and the current economic backdrop.
As economic and political turmoil encapsulates the market, some stocks have been performing consistently well over the years, positioned as solid investments, especially for new investors. That said, let’s take a look at the 11 best beginner stocks to invest in now.
Our Methodology
To come up with the 11 best beginner stocks to invest in now, we compiled a list of the top blue chip stocks. We then tracked the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders as of Q3 2024, according to Insider Monkey’s database.
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: 112
UnitedHealth Group Incorporated (NYSE:UNH) ranks sixth on our list of best beginner stocks to invest in right now. It is a multinational health insurance and services company based in the United States that operates several subsidiaries including UnitedHealthcare, Optum, Change Healthcare, and United Health Foundation. On the financial front, UnitedHealth Group Incorporated (NYSE:UNH) logged $100.8 billion in revenue, up by nearly $8.5 billion, in the third quarter of 2024. Revenue was primarily driven by growing customers for its Optum and UnitedHealthcare segments. In addition to that, by the end of Q3 2024, customers served by UNH’s commercial domestic offerings grew by nearly 2.4 million, to reach 29.7 million.
The company is notorious for expansion and has started offering its services to more locations over the past few months. In addition to that, as part of its Medicare Advantage Plan for 2025, UnitedHealth Group Incorporated (NYSE:UNH) plans to reduce the cost of healthcare for patients with chronic diseases. On November 1, the company announced that it is expanding its individual and family plans to 30 more states on the Health Insurance Marketplace. The expansion aligns with the company’s mission to offer equitable and affordable healthcare services to people across the United States.
For its 2025 outlook, UnitedHealth Group Incorporated (NYSE:UNH) expects revenues to range between $450 billion and $455 billion, and cash flows from operations are projected to reach $32 billion to $33 billion. Overall, analysts are also bullish on the stock, and their median price target of $635 represents an upside of 8% from current levels.
Mairs & Power Growth Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2024 investor letter:
“One great example of this is UnitedHealth Group Incorporated (NYSE:UNH), a long-term holding of the Fund. Founded in 1974 in Minnetonka, Minnesota, UnitedHealth Group has grown to become the largest managed care organization in the United States. UnitedHealth Group is already working on multiple AI use cases that could potentially save the company billions of dollars in efficiencies over the next several years. For instance, the company’s call centers receive more than a million calls per day. AI could potentially divert or resolve customer concerns without human interaction. We fully admit the company is not perfect and has its ups and downs. Earlier this year, the company was caught up in a large data breach from a company it acquired in 2022. Healthcare is also deeply political, and UnitedHealth Group can often find itself in the political crosshairs during an election year. We’ve seen these political risks play out before and believe UnitedHealth Group will again emerge unscathed.”
Overall, UNH ranks 6th on our list of best beginner stocks to invest in now. While we acknowledge the potential of UNH to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.