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3 Health Insurers That Crushed S&P YTD, Set to Rise Further

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After reeling under the unrelenting COVID-led turmoil for long, the S&P Index is now gradually recovering. Year to date, this benchmark index has gained 14.7%. In this regard, we have to mention that the index saw its worst first quarter this year due to the coronavirus outbreak. However, right now, investors are regaining confidence as economies reopened and COVID-19 vaccine trials are in full bloom. 

Meanwhile, the health insurance industry has so far showed a decent performance in 2020 with minimal impact from the ongoing pandemic chaos. The companies are favored by their financial strength, government aid as well as a rise in telemedicine visits. While the healthcare system suffered unprecedented financial stress triggered by the pandemic, the health insurers gained a sweet spot.

It is believed that the leading health insurers understand the key trends reshaping the industry amid the pandemic and have been gaining traction from the same so far. The stocks weathered the swings in the markets, which is evident from the respective companies’ impressive results.

Earnings of leading players like Humana Inc. (HUM - Free Report) and Select Medical Holdings Corporation (SEM - Free Report) surpassed estimates in all the three quarters of 2020.

In fact, the pandemic provided some relief to the insurers’ Medical Loss Ratio (MLR), which is the ratio of premiums spent on claims. With maximum hospitals postponing the elective procedures and surgeries, it positively impacted the MLR of health insurers in the form of lower claim outgo.

The industry players are well-poised for growth on the back of a host of Medicaid businesses, strategic alliances, growing membership, better claims handling, disciplined medical cost management, financial attractiveness, shift to value-based care and changing demographics.

Further Upside Left?

We believe that these companies will continue witnessing an upsurge on the back telehealth and virtual care services offering, aging population, improving top lines and strategic measures.

Given the current scenario and the constant initiatives taken by the companies, we expect the health insurance space to continue taking leverage of the same and advancing further.

3 Health Insurance Outperformers YTD

Here are some health insurers, which have managed to outperform the S&P 500 Index so far this year. All stocks have a Zacks Rank #3 (Hold), currently, and an impressive VGM Score of A or B. This style score analyzes the growth potential of a company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UnitedHealth Group, Inc. (UNH - Free Report) has been gaining on the back of its growing top line, favorable earnings guidance and a healthy balance sheet. Its health service business, branded as Optum, also contributed to growth. The company has witnessed its 2020 earnings estimate move 0.1% north over the past 30 days. The stock has rallied 14.4% year to date.

The Joint Corp. (JYNT - Free Report) is a healthcare franchiser of chiropractic clinics. It also provides a family wellness plan. The company offers removal of subluxations as well. Over the past 60 days, the stock has witnessed its current-year earnings estimate being revised 68.4% upward. Shares have surged 60.6% year to date.

Molina Healthcare Inc. (MOH - Free Report) is constantly benefiting from its healthy revenue stream, solid solvency level, a series of restructuring measures and rising membership. A bullish outlook should instill investors’ confidence in the stock. The company has witnessed its 2020 earnings estimate move 2.4% north over the past 30 days. Shares of this health insurer have gained 47.1% year to date.

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