As those who invest with me know, I focus a lot of my strategy on owning great American companies. I believe this is the best way to build long-term wealth, and now is a great time to be buying these kinds of companies.
One such name I’d like to talk about today is UnitedHealth Group Inc (NYSE:UNH), the nation’s largest health insurer. The company is based in the United States and also provides pharmacy, primary care and data services.
Through its two platforms, UnitedHealthcare and Optum, UNH caters to customers in all 50 states as well as in more than 125 other countries. It has nearly 260,000 employees, which includes 30,000 physicians and nurses.
UnitedHealth is a strong company, and its stock has also been a very strong performer for years. It has climbed nearly 215% over the last five years, 55% over the last two years and 14% in 2017 alone. If you’ve been a long-term holder, I suspect you’re sitting on a pretty hefty profit. The thing is, I think this stock can continue higher.
UNH Stock by the Numbers
Even with such a big move over a long period of time, UnitedHealth’s fundamentals have continued to improve.
In the most recent quarter, the company beat expectations on both the top and bottom lines — earnings per share of $2.23 and revenue of $48.7 billion — and management boosted full-year revenue guidance to $200 billion, also slightly above the consensus. For comparison, the combined full-year revenue forecast for UNH’s three largest competitors — Anthem Inc (NYSE:ANTM), Aetna Inc (NYSE:AET) and Humana Inc (NYSE:HUM) — is below that.
I also like that the company finds ways to return cash to shareholders, recently announcing a 20% increase in the quarterly dividend. The stock will go ex-dividend on June 15 — so you would need to own it before that day to qualify — and pay shareholders of record 75 cents per share on June 27. That works out to a 1.6% yield at the current price, which is a lot better than you’ll get in a savings account.
I find it encouraging that UnitedHealth has gained market share over the last two years, and while its peer-to-peer valuation puts it in the middle with respect to forward P/E, it still sports the lowest PEG (price/earnings-to-growth) ratio, which reflects that strong growth.
The bottom line is that even with UNH trading at all-time highs — in fact it has hit a new high each day so far in June — I continue to view it as a good investment. This is just one of many great American companies that will keep growing over time.
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