Luke Lango’s last digital Medicare pick is up 40% … another company in the same space, appearing poised for gains … the path to a 1,000%+ return

 

The Urban Institute reports that in 1960, men who turned age 62 could expect to live another 15 years.

By 2040, men who turn 62 will likely live for another 22 years.

This helps illustrate a reality of U.S. demographics today – our population is getting older and we’re living longer.

But that’s powering a select group of stocks that are able to service the needs of this graying of America.

For example, on September 1, our hypergrowth expert, Luke Lango, highlighted the company SelectQuote (SLQT) for his Daily 10X Stock Report subscribers.

It would seem to have been very poor timing given the multi-week selloff in stocks that followed.

As it turns out, Daily 10X subscribers who acted on Luke’s issue are up 40% as I write Thursday afternoon.

Here’s Luke, explaining what’s behind the gains:

The digital Medicare market may be the most slept on investment megatrend on Wall Street today, and the stocks in that space are great buys.

In today’s Digest, we’re offering readers who missed SLQT another swing at the plate.

In one of Luke’s recent Daily 10X issues, he profiled a second digital Medicare company. He writes that it’s “very much like SelectQuote, with a very similar valuation, that has a very similar business model and long-term growth prospects. In other words, if you’re bullish on SelectQuote, you should be bullish on this stock, too.”

So, today, let’s do our best to put some money in your pocket thanks to a trend that isn’t going away anytime soon – the aging of America.

***Where “getting old” overlaps with “digital technology”

For newer Digest readers, Luke is our hypergrowth expert, and the analyst behind the Daily 10X, as we call it. His specialty is finding market-leading tech innovators that are pioneering explosive trends, capable of generating 10X returns for investors over the long-term.

The Daily 10X is like nothing else we offer. Luke doesn’t keep a portfolio or provide sell advice. But every day the market is open, he highlights a small cap stock with the potential to grow 1,000%.

It’s a lucrative approach to the markets. To illustrate, in just the past five years, Luke has recommended 17 different 1,000%+ gaining stocks. Most investors never enjoy even one such 10X-winner.

Returning to today’s opportunity, what’s creating the potential for 1,000% returns?

Here’s Luke:

Long story short, America’s getting old.

Within 20 years, one out of every five people in this country will be over the age of 65 – versus just 16% today. This aging population implies huge and growing demand for Medicare services in the coming decades.

Moreover, many of these people have been immersed in the Digital Economy for the past 20 years, and therefore, are seeking digitally-first Medicare solutions.

Such solutions are niche today. They’ll be the standard tomorrow.

And therefore, today represents a great opportunity to invest in the companies that provide these digital Medicare services.

So, what’s the company in position to help these seniors, while also helping your portfolio returns?

GoHealth (GOCO).

***One of the leading players in the digital Medicare marketplace

Here’s Luke with the overview:

Like SelectQuote, GoHealth is a digital, direct-to-consumer insurance marketplace where consumers can easily discover senior healthcare plans. Unlike SelectQuote, GoHealth focuses entirely on the Medicare market, and does not offer auto or home plans.

GoHealth’s “ninja skill” in the marketplace is two-fold.

On one end, GoHealth leverages machine-learning algorithms powered by nearly two decades of insurance behavioral data to optimize the process for helping individuals unbiasedly find the best health insurance plans specific for their needs.

On the other end, GoHealth employs a hybridized model that relies heavily on a team highly trained agents to lead the lead-gen, sales, and customer acquisitions processes.

This two-pronged approach is working. Over the past several years, the company has grown revenues at a 50%-plus rate.

At the same time, the company’s stock price became a victim of the excitement surrounding its IPO.

GoHealth went public roughly one year ago. It raised a whopping $914 million on its first day on the Nasdaq. That was the highest valuation healthcare IPO of the year at that time.

It also put GoHealth’s valuation at about $6.6 billion. Keep in mind, just a year earlier, when the company was private, it was valued at $1.5 billion.

That’s a massive valuation runup, setting the stage for a bubble prick. And that’s exactly what happened.

Luke points out that today, the stock trades about 75% below its IPO price, valued at just $1.7 billion.

But that’s an opportunity.

***How GoHealth turns into a 10-bagger

Luke is quick to say that this is a competitive market. However, GoHealth is outrunning its competition. After profiling the top companies in this space, Luke writes that virtually no one is growing as quickly or sustainably as GoHealth.

Add to that a business model that is hyperscalable – with very high gross margins at scale.

Finally, there’s a cheap valuation. As noted a moment ago, GoHealth is worth roughly $1.7 billion today. But remember, more than one year ago, when it was private, it was valued at just $1.5 billion. The current valuation doesn’t adequately reflect GoHealth’s growth and traction since.

Here’s Luke with more:

The valuation is dirt cheap.

You have a $1.7 billion company, that is set to do $1.6 billion in sales next year – and is projected to keep growing that sales base at a double-digit pace into the back-half of the 2020s.

So, you have a 10%-plus grower trading around 1X next year’s sales. That’s dirt cheap.

Let’s stick with the numbers. Here is Luke’s specific mathematical roadmap to how GoHealth climbs 1,000%:

The 2030 consensus Wall Street sales estimate is $4.7 billion. Admittedly, that’s aggressive. But we think $4 billion is doable.

This is basically an e-retail marketplace. E-retail stocks average a 4.5X sales multiple in today’s market.

A 4.5X sales multiple on $4 billion in revenues implies a potential future valuation of $18 billion.

With GoHealth valued at $1.7 billion today, that puts a 2030 valuation of $18 billion at a 10X+ return.

A quick reminder – the entire goal of Luke’s Daily 10X service is to highlight potential moonshots like GoHealth. They’re short issues, succinctly laying out the opportunity, the challenges, and the path to a 10X return. To learn more about subscribing, click here.

I’ll give Luke the final word on today’s opportunity:

Wall Street is sleeping on the digital Medicare boom. You shouldn’t.

SelectQuote looks like it will emerge as a big winner in this space. But it won’t be alone. The industry is too big for just one player.

GoHealth has a good chance to join SelectQuote as a long-term winner in this space, thanks to its data, ML algos, specialty in Medicare, and highly trained agent staff.

The stock is dirt-cheap at current levels. There’s a lot going for GoHealth today – so much so that it may be worth taking a nibble on this stock down at $5.

Have a good evening,

Jeff Remsburg