We recently compiled a list of the 10 Oversold Blue Chip Stocks to Buy Now. In this article, we are going to take a look at where Humana Inc. (NYSE:HUM) stands against other oversold blue chip stocks.
Market experts believe that, so far, 2024 continues to be a strong year for the broader stock market. With the predictions of rate cuts, some strategists opine that next year can be another year for the equities. On a YTD basis, the S&P 500 saw an increase of over ~22%. On a related note, Fidelity Investments (in the note dated October 16, 2024) highlighted that equities rallied in Q3 2024, courtesy of real estate, US value, and some small-cap stocks. While volatility increased in August, it decreased later. This led to a productive September.
Fidelity Investments went on to say that the US labor market demonstrated signs of cooling. However, it remained strong overall. Despite some softness in manufacturing, some of the major global economies continued to expand. Elsewhere, in China, new policies to fuel stock prices were rolled out. While the positive impact was seen in the Chinese equities post the stimulus measures, there remains some uncertainty regarding the long-term impact.
Factors to Watch Out For in 2025
With 2024 approaching an end, global investors continue to wonder about the factors that might influence the broader financial markets in 2025. The markets are intertwined, making US stocks more sensitive to several factors. Forbes reported that the results of the 2024 presidential election, domestic inflation and rates, technology innovation, economic trends, and elevated geopolitical tensions are some of the factors likely to influence the financial markets
As per TradingBlock, the tariff measures, together with a national deficit, are some of the critical issues for the next president. While the new tariffs can slow down the broader US economy, the deficit, if left unchecked, might lead to continued devaluation of the U.S. dollar. Also, a slowdown of the US economy might result in inflation worries.
Some market experts continue to worry about the Chinese economy. As per SALT Venture Group, the slowness in China can be a constraint for the stock market growth in the next year. This is because this slowdown can weaken the demand for US exports. As per CEIC, the US total exports to China sat at ~$12.618 billion in August 2024.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What to Expect from the Stock Market in 2025?
Forbes reported that experts are predicting stock market growth to vary in the range of a 5% decline to growth of 20% in 2025. However, some experts believe that a 10% increase is expected to be the most likely scenario. UBS expects that the stock market is on track for another year of double-digit gains. The strategists made a bullish call for stocks, projecting that the S&P 500 is expected to touch 6,600 by next year’s end. The firm went on to add that the increase is expected to be aided by a “no landing” for the economy.
The improved US macroeconomic outlook has increased the bank’s degree of certainty about the positive view of equities. Notably, the job market continues to be resilient amidst tighter financial conditions and elevated interest rates. Investors might witness some volatility because of the November election, but it’s unlikely that it will be a hurdle to more positive market drivers.
A senior executive looking up at a large boardroom filled with the stocks their company manages.
Our Methodology
To list the 10 Oversold Blue Chip Stocks to Buy Now, we extracted the companies that have a market cap of over $10 billion by using a Finviz screener. After getting an initial list of 25-30 stocks, we chose the ones trading at a forward P/E multiple of less than 15.0x and which have fallen significantly on a YTD basis. Finally, the stocks were ranked in the ascending order of their hedge fund sentiments, 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).
Humana Inc. (NYSE:HUM)
Market cap (As of 25 October): $31.3 billion
Forward P/E (As of 25 October): 13.21x
% Decline on a YTD Basis: ~44.5%
Number of Hedge Fund Holders: 71
Humana Inc. (NYSE:HUM) provides medical and specialty insurance products in the US.
Wall Street believes that Humana Inc. (NYSE:HUM)’s diversified, value-based healthcare delivery and services model should drive its topline growth. The company’s focus on serving Medicare-eligible and disabled individuals via diversified healthcare delivery and services might also strengthen its market position. Humana Inc. (NYSE:HUM) has been undergoing a leadership transition. The new CEO continues to ramp up the turnaround efforts. The analysts believe that these efforts are focused on improving operational efficiency, enhancing healthcare delivery, and potentially exploring new growth opportunities.
The company announced plans to reduce its workforce and implement cost-saving measures. These measures should help Humana Inc. (NYSE:HUM) tackle financial pressures from the star ratings decline and position for future growth. Its healthcare delivery and services infrastructure is a key growth enabler. As per analysts, this infrastructure should help the company improve outcomes and reduce costs over time. Eventually, this should provide a competitive advantage in the Medicare Advantage market.
Moving forward, Humana Inc. (NYSE:HUM)’s strong brand recognition in Medicare Advantage, healthy healthcare delivery and services infrastructure, and diversified portfolio of insurance products and health services are expected to support the company’s growth trajectory. Considering the US demographic trends, along with higher penetration of Medicare Advantage plans in the eligible population, Humana Inc. (NYSE:HUM) is well-placed to take advantage of the opportunities provided by one of the fastest-growing areas in US medical insurance.
Analysts at Cantor Fitzgerald reissued a “Neutral” rating on the shares of the company, setting a $395.00 price target on 1st October. Diamond Hill Capital, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Other top Q2 contributors included Humana Inc. (NYSE:HUM) and Boston Scientific Corporation. Shares of health insurance company Humana rebounded from their recent downturn, which was tied to investors’ concerns about weaker-than-expected Medicare Advantage rates for 2025 and was the byproduct of an overall difficult operating environment.”
Overall HUM ranks 1st on our list of 10 Oversold Blue Chip Stocks to Buy Now. While we acknowledge the potential of HUM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HUM 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.
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