Best Performer: UnitedHealth Group
My first selection is UnitedHealth Group (NYSE:UNH), whose main business is providing healthcare benefit plans for corporations and individuals primarily in the U.S. but expanding internationally.
Serving 41 million people worldwide, UNH’s growth will come from providing healthcare benefits outside the U.S. In 2012, it took a big step forward acquiring 65% of Amilpar, Brazil’s largest provider of private healthcare coverage, for $3.5 billion. It will acquire an additional 25% for $1.3 billion in the first half of 2013 with its CEO and shareholders retaining 10%.
With skin in the game, CEO Edson Bueno will move quickly to take advantage of the huge opportunity that exists in Brazil. While Amilpar had 5.8 million plan members at the end of 2011 — which was 61% higher than its next biggest rival — it still represents just 7% market share. Even more compelling is the fact just 25% of the Brazilian population has private health insurance with the greatest coverage in Sao Paulo and Rio de Janeiro. With something like 1,542 private healthcare coverage providers in the country, consolidation is going to be fast and furious.
With UnitedHealth’s stock being flat on the year while 16 of the Dow components are up double digits, I believe Mr. Market will grow to appreciate its push into Brazil. Look for a big move later in the year.