UNH: Here is Why it’s an Opportunity Now
Market hates $UnitedHealth(UNH)$ and everybody is just concentrated on risks.
This creates an opportunity.
This company has:
- 5 year revenue CAGR of 11%.
- 24% median ROE since 2020.
- 15% long-term projected earnings growth.
Here is why it’s an opportunity now:
It was 2022…
I remember the exact progression of the events:
Inflation proved more persistent than the Fed predicted.
The Fed started to increase rates earlier than forecasted.
The rate hikes were way faster than predicted.
Into that macroeconomic environment, Meta announced in its earnings call the first-ever decline in active users in its history.
Shares plummeted 20% instantly. That was brutal.
I remember the headlines:
Nobody is using Facebook anymore.
TikTok is disrupting Instagram.
Metaverse is an empty bet.
Bear arguments seemed so reasonable—Facebook apps were all saturated, ad prices were already optimized, and apps were already full of ads.
It looked like there was literally no way Meta could keep growing revenue fast.
Result? Shares declined more than 70% in a year!!
This wasn’t a freaking altcoin, it was the fourth largest company in the world and it lost more than 70% of its market cap in a year…
Though it looked ugly, there were bullish arguments too:
This is a company that has the strongest network effects in the world.
Demand for digital advertising will continue to increase.
It has immense pricing power.
They argued that loss of users stemmed largely from inflated growth in the Covid era, as those who wouldn’t otherwise use the apps had given them a shot in lockdown and now they were pulling back.
Let me tell you this—betting on the bullish scenario was extremely uncomfortable.
If you had the bearish view at the time, you kept your money in your pocket so you would be comfortable.
But betting on the bullish view is extremely uncomfortable as you are taking money out of your pocket and putting it on the table, as all the price action, headlines, and sentiment are against you.
What I want you to internalize is that this uncomfortable position is exactly why investors are rewarded in the stock market.
You assume the risk when others don’t, you give up your comfort, and you are rewarded handsomely if you are right.
This is the only way.
If you aren’t right, you don’t make money; but if you are aligned with everybody and everything, you don’t make any money either.
Everybody has the same influences. Everybody thinks pretty much the same. Everybody anoints the same winners and the same… and criticizes the same losers. And obviously, tomorrow’s winners are usually found on the pile of today’s losers, not on today’s pile of today’s winners.
Success in investing requires taking uncomfortably idiosyncratic positions.
—Howard Marks
Those who bet on Meta back in 2022 made 6x their money in 2 years. It was Meta they were buying, not a no-name scam coin pumped by a 21-year-old influencer.
Today, UnitedHealth is in the position of being that uncomfortable debt…
It’s now down 43% in the last twelve months, negative news is being published non-stop, and it’s hard to find anybody who is bullish…
Bearish arguments are abundant:
Medical costs are rising.
Regulatory risks are mounting.
The government is investigating it for fraud.
Yet, when you look at the data, this business grew revenues 11% annually in the last 5 years.
You know what’s even more surprising?
Last quarter, it posted its first earnings miss since 2008!
Yet, the stock is priced like it’s heading to bankruptcy.
And just like Meta in 2022, there are bullish arguments too:
It’s still the fastest-growing provider despite its size.
Vertical integration allows it to use operational leverage.
It can easily go back to growth by bidding up for 2026.
And again, this is an uncomfortably idiosyncratic bet…
I don’t know whether it’ll be similar to Meta, I have no idea how long it’ll take, and I am nobody to tell you whether it’s committing fraud or not.
But I know one thing—this is a setup you need to bet on.
And I know that UnitedHealth has all the business fundamentals to make it work.
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
