Shares of CVS Health (CVS 0.62%) have been rallying this year amid encouraging financial results. The stock hit a new 52-week high of $92.77 on Monday, with its year-to-date returns thus far sitting at just over 16%, which is better than the S&P 500's gains of 8%.
The healthcare company recently posted strong quarterly earnings numbers, which appear to have given investors confidence that the business is going in the right direction. It has faced challenges in recent years due to rising costs, but now, it looks to be in considerably better shape. And although it's now more than doubled since the start of 2025, here's why it may not be too late to invest in CVS.
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What has investors so bullish on CVS?
On May 6, CVS Health posted its first-quarter results for 2026, which showed revenue rising by more than 6% to $100.4 billion. On the bottom line, net income came in at just under $3 billion, up 66% from the prior-year period. Another solid number was its medical benefit ratio (MBR), which came in at 84.6% versus 87.3% a year ago. The MBR is a key metric as it tells investors just how much the company is paying out on medical claims versus the premiums it collects. A high ratio in the past, due to heightened utilization rates, has been negatively impacting its bottom line. Now, with that ratio coming down, it's an encouraging sign to healthcare investors that perhaps CVS is facing more predictability in its costs.
Rising costs have been plaguing health insurers in recent years and have weighed on valuations, which is why, despite its impressive rally, CVS Health stock may have room to rise further.
NYSE: CVS
Key Data Points
Why it may not be too late to invest in CVS Health
Currently, CVS Health's stock trades at a forward price-to-earnings multiple of 13, which is based on analyst estimates. By comparison, the average S&P 500 stock trades at a forward earnings multiple of 22. CVS Health remains a very reasonably priced stock given its stability and potential upside.
Although it's reached a new high, the stock is only up around 9% over the past five years, reflecting the struggles it encountered earlier. Not only can it rise higher, but it can also be an excellent dividend stock to own, as CVS yields 2.9%, a solid payout that can help pad your overall returns and bring in a lot of recurring income for your portfolio.
