In this article, we discuss the top 5 health insurance stocks to buy. If you want to read about some more health insurance stocks, go directly to Top 10 Health Insurance Stocks to Buy.
5. Centene Corporation (NYSE:CNC)
Number of Hedge Fund Holders: 58
Centene Corporation (NYSE:CNC) operates as a multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States. It is one of the best insurance stocks to invest in. On September 19, Texas Attorney General Ken Paxton announced a $165.6 million settlement with Centene and its units over alleged Medical Fraud. On July 25, Centene said that it will sell its European and Spanish Healthcare businesses as the company continues to review strategic alternatives for its international portfolio.
On October 3, Barclays analyst Steve Valiquette maintained an Overweight rating on Centene Corporation (NYSE:CNC) stock and lowered the price target to $100 from $107, highlighting that the company expected a better medical cost in Q3.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Viking Global is a leading shareholder in Centene Corporation (NYSE:CNC), with $8.3 million shares worth more than $701.7 million.
4. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 65
CVS Health Corporation (NYSE:CVS) provides health services in the United States. It is one of the top insurance stocks to invest in. On September 8, Aetna, a unit of CVS Health, said that it will enter an individual exchange marketplace in New Jersey with its co-branded insurance product on January 1, 2023. It will give members access to hospitals, specialists, primary care doctors, and mental health providers.
On September 7, Evercore ISI analyst Elizabeth Anderson maintained an Outperform rating on CVS Health Corporation (NYSE:CVS) stock and raised the price target to $125 from $120, noting that the updated ratings model included accretion estimates from the Signify Health acquisition on a pro forma basis.
In its Q3 2022 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE:CVS) was one of them. Here is what the fund said:
“CVS Health Corporation (NYSE:CVS) is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
3. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 66
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. It is one of the elite insurance stocks to invest in. On September 28, Cigna Corp said that it has launched a suite of products, including Cigna Pathwell, to connect customers with quality care providers and lower costs for customers. Pathwell uses clinical expertise, digital solutions, treatment planning, and analytics to integrate with the company’s medical benefits management to create a personalized care experience for patients.
On August 8, investment advisory UBS maintained a Buy rating on Cigna Corporation (NYSE:CI) stock and raised the price target on Cigna to $330 from $310. Analyst Kevin Caliendo issued the ratings update.
At the end of the second quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Cigna Corporation (NYSE:CI), compared to 63 in the preceding quarter worth $2.7 billion.
In its Q2 2022 investor letter, Aristotle Capital Management, LLC , an asset management firm, highlighted a few stocks and Cigna Corporation (NYSE:CI) was one of them. Here is what the fund said:
“Cigna Corporation (NYSE:CI) contributed to performance in the second quarter, outpacing the benchmark Health Care sector return. We believe Cigna benefited from investors seeking relative “safety” in the managed care sector and the stock’s attractive valuation at just over 10 times next year’s earnings. During the quarter, Cigna reported an earnings beat due to a better-than-expected medical loss ratio.”
2. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 69
Humana Inc. (NYSE:HUM) operates as a health and well-being company in the United States. It is one of the major insurance stocks to invest in. On October 12, Humana and USAA, a health insurer, co-branded Rx Plan, a medicare advantage plan which will provide flexibility to users to see in network local doctors and fill prescriptions at pharmacies close to their homes. It is the only Medicare advantage plan developed in partnership with USAA.
On September 20, RBC Capital analyst Frank Morgan maintained an Outperform rating on Humana Inc. (NYSE:HUM) stock and raised the price target to $544 from $541, noting that the company’s strong long-term earnings targets had led to growth in core Medicare Advantage and value-based care initiatives.
In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Humana Inc. (NYSE:HUM) was one of them. Here is what the fund said:
“A top contributor to performance for the one-year period was Humana Inc. (NYSE:HUM) (U.S.), a leader and near pure play in the fastest growing sector of managed care, Medicare Advantage. In its first-quarter earnings report, the company generally beat consensus estimates and raised guidance. Encouragingly, the issues that had caused this year’s Medicare Advantage enrollment shortfall seem to have stabilized, and during the most recent open enrolment period, member retention appears in line or even slightly better than expectations. In addition, Humana reaffirmed its full-year guidance for $24.50 adjusted earnings per common share. The company’s second-quarter earnings results also beat consensus expectations due to lower than expected medical expenses, which stemmed from a decline in Covid-19-related medical costs that was not fully offset by all other medical costs returning to normal levels. Management also indicated that the company is tracking well against achieving its $1 billion cost-savings plan by the end of 2023, and it intends to reinvest the majority of those savings into improved member benefits. Ultimately, Humana’s share price reached our sell target, and we opted to eliminate the position.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 91
United Group Incorporated (NYSE:UNH) operates as a diversified health care company in the United States. It is one of the major insurance stocks to invest in. On October 12, the United Health Foundation, a humanitarian foundation of UnitedHealth Group, announced a 3 year partnership with Active Minds, a non-profit mental health organization. On October 3, UnitedHealth donated $1 million to support residents of Florida which were affected by Hurricane Ian.
On October 17, RBC Capital analyst Ben Hendrix maintained an Outperform rating on UnitedHealth Group Incorporated (NYSE:UNH) stock and raised the price target to $592 from $588, noting that the company reported strong Q3 results.
At the end of the second quarter of 2022, 91 hedge funds in the database of Insider Monkey held stakes worth $10.9 billion in United Group Incorporated (NYSE:UNH), compared to 103 in the preceding quarter worth $12.8 billion.
In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and United Group Incorporated (NYSE:UNH) was one of them. Here is what the fund said:
“UnitedHealth Group Incorporated (NYSE:UNH) reported solid quarterly results and raised 2022 guidance modestly. Additionally, managed care is another industry that is viewed as defensive in the current environment, which helped support UnitedHealth and its peer group.”
You can also take a peek at 10 Best MLP Dividend Stocks to Buy and 10 Best Stocks to Buy According to Billionaire Dan Loeb.
