UnitedHealth Group: [NYSE:UNH] Feb. 29, 2008 close: $46.48
52-week range: $44.00 [Feb. 13, 2008] - $59.46 [Dec. 24, 2007]
UnitedHealth Group is a major diversified health and wellness organization with estimated revenues of around $80 billion projected for 2008. The company gained tremendous notoriety in early 2006 when its former CEO was forced to resign over back-dated stock option awards.
The company has been a superb growth vehicle over the past years. From [split-adjusted] EPS of $0.22 in 1996 earnings increased each year since then to $3.48/share in 2007. Revenues surged from $11.79 billion 10 years ago to over $75 billion in 2007. Book value/share kept pace with a 10-year gain from $2.97 to $16.60.
After hitting a very recent high of $59.46 last December 24th, UNH shares have sunk to close last week at just $46.48 or < 13.4x 2007's actual reported earnings. The forward P/E is an even lower 11.8x the consensus estimate of $3.96 for 2008. Both the trailing and projected P/Es are the lowest in UNH's entire trading history. Prior to 2007 the smallest annual average P/E for UNH shares had been 16.4x in 2003. 2003 proved to be a great time to load up as UNH shares then went from $19.60 to $64.60 in under three years.
Value Line is conservatively using just a 16.5 multiple to reach their 3 - 5 year target price range of $90 - $120. Value Line assigns UNH shares an 'A+' financial strength rating and 95th percentile ranks for both 'price growth persistence' and earnings predictability. In short, these are high-quality, low beta [0.70] shares at an extremely attractive current valuation.
Heavyweight Shareholders [as of Dec. 31, 2007]:
[Dec. 31, 2007 price: $58.20]
Cap. Research & Mgt. - 5.57%
Marisco Cap. Mgt. - 5.10%
Barclays Global Mgt. - 4.44%
FMR [Fidelity Funds] - 3.66%
Clearbridge Advisors - 3.64%
State Street Corp. - 3.39%
Legg Mason Cap. Mgt. - 3.23%
Vanguard Group - 2.97%
Gurus Owning UNH [as of Dec. 31, 2007]:
Warren Buffett
Robert Olstein
George Soros
Dodge & Cox
Chris Davis
Edward Owens
David Dreman
Kenn Fisher
Glenn Greenberg
Ron Baron
Ron Muhlenkamp
Wallace Weitz
Bill Miller
Forbes [March 10th, 2008 issue] noted that the former CEO grew UNH into the nations largest health care services company and that their new CEO Stephen Helmsley gets no stock options.
Peter H Costa, health care analyst at FTN Midwest was quoted as saying he believes that UNH's problems are now behind it. He noted that UNH is a leader in Medicare Advantage- a federally backed prive health insurance program for the elderly. The AARP just signed up UnitedHealth to offer the program to its members- a huge market.
If UnitedHealth Group trades at just 16.5 times projected estimates of $3.96 for this year we could see a 'healthy' share price of $65.34 or plus 40.5% from last week's quote.
It's not often you can buy a confirmed growth stock at under 12 times forward earnings, especially one with such high quality metrics.
NOTE TO COMMODITY: Warren owns it.
52-week range: $44.00 [Feb. 13, 2008] - $59.46 [Dec. 24, 2007]
UnitedHealth Group is a major diversified health and wellness organization with estimated revenues of around $80 billion projected for 2008. The company gained tremendous notoriety in early 2006 when its former CEO was forced to resign over back-dated stock option awards.
The company has been a superb growth vehicle over the past years. From [split-adjusted] EPS of $0.22 in 1996 earnings increased each year since then to $3.48/share in 2007. Revenues surged from $11.79 billion 10 years ago to over $75 billion in 2007. Book value/share kept pace with a 10-year gain from $2.97 to $16.60.
After hitting a very recent high of $59.46 last December 24th, UNH shares have sunk to close last week at just $46.48 or < 13.4x 2007's actual reported earnings. The forward P/E is an even lower 11.8x the consensus estimate of $3.96 for 2008. Both the trailing and projected P/Es are the lowest in UNH's entire trading history. Prior to 2007 the smallest annual average P/E for UNH shares had been 16.4x in 2003. 2003 proved to be a great time to load up as UNH shares then went from $19.60 to $64.60 in under three years.
Value Line is conservatively using just a 16.5 multiple to reach their 3 - 5 year target price range of $90 - $120. Value Line assigns UNH shares an 'A+' financial strength rating and 95th percentile ranks for both 'price growth persistence' and earnings predictability. In short, these are high-quality, low beta [0.70] shares at an extremely attractive current valuation.
Heavyweight Shareholders [as of Dec. 31, 2007]:
[Dec. 31, 2007 price: $58.20]
Cap. Research & Mgt. - 5.57%
Marisco Cap. Mgt. - 5.10%
Barclays Global Mgt. - 4.44%
FMR [Fidelity Funds] - 3.66%
Clearbridge Advisors - 3.64%
State Street Corp. - 3.39%
Legg Mason Cap. Mgt. - 3.23%
Vanguard Group - 2.97%
Gurus Owning UNH [as of Dec. 31, 2007]:
Warren Buffett
Robert Olstein
George Soros
Dodge & Cox
Chris Davis
Edward Owens
David Dreman
Kenn Fisher
Glenn Greenberg
Ron Baron
Ron Muhlenkamp
Wallace Weitz
Bill Miller
Forbes [March 10th, 2008 issue] noted that the former CEO grew UNH into the nations largest health care services company and that their new CEO Stephen Helmsley gets no stock options.
Peter H Costa, health care analyst at FTN Midwest was quoted as saying he believes that UNH's problems are now behind it. He noted that UNH is a leader in Medicare Advantage- a federally backed prive health insurance program for the elderly. The AARP just signed up UnitedHealth to offer the program to its members- a huge market.
If UnitedHealth Group trades at just 16.5 times projected estimates of $3.96 for this year we could see a 'healthy' share price of $65.34 or plus 40.5% from last week's quote.
It's not often you can buy a confirmed growth stock at under 12 times forward earnings, especially one with such high quality metrics.
NOTE TO COMMODITY: Warren owns it.
