UnitedHealth Group (UNH -0.01%) is the top dog in health insurance in America, recently with a market value of $313 billion. Its stock is down some 37% over the past year, though, for several reasons, such as its being investigated by the Department of Justice for possible Medicare fraud, and its CEO having stepped down.
With the stock down so much, that means its dividend yield has been pushed up -- recently to 2.5%. (Add in stock buybacks, and shareholders have recently been rewarded with a total yield of 5.5%, per Morningstar.com.)
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All this has created a promising buying opportunity for anyone who believes that UnitedHealth will turn its fortunes around over the long haul. If you're a UnitedHealth bull and are thinking of buying, you might want to do so before Oct. 28, because that's when the company will release its next earnings report. If the news is good, the stock may pop, though if it disappoints, there may be an even more attractive entry point ahead. (Note that Warren Buffett's company, Berkshire Hathaway, has been buying shares and recently owned a stake worth nearly $1.6 billion.)
There are certainly reasons to be hopeful. The company is planning to trim costs (in part with the help of artificial intelligence (AI) and to increase premiums in 2026 and 2027. Many investors are feeling better about the company, and its shares have risen close to 16% in the past month. Simple demographics are auspicious, as our growing and aging population will continue to need healthcare -- and medications. (UnitedHealth includes the pharmaceutical specialist Optum.)
The stock appears undervalued, as well, with its recent price-to-earnings (P/E) ratio of 15 well below its five-year average of 23.6 and its price-to-sales ratio (PSR) of 0.75 below the five-year average of 1.29. So take a closer look if you find yourself intrigued.
