Gordon Reid Elevance Health Inc ELV-N BUY Feb 03, 2025

Continues to like it. Healthcare has been in the penalty box the past year. ELV was Anthem. It insures 48 million Americans. Growing 15% annually, but trades at only 14x earnings. 

Out of favour in 2023. Healthcare is one of the areas where he expects the rotation to go, big opportunity. Stock's flat for last 2 years, but EPS is up 27%. 15x PE this year, 13.5x next year. Estimates of double-digit revenue growth and 15% annual earnings growth. The insurers, in particular, are ripe for a rebound. Yield is 1%.

Based on chart performance, this stock could be building a base. Waiting for new highs before purchasing. Could be promising. 

Trades at 4-5 multiple points lower than UNH, fundamentals are equally good.

Whole group has stalled a bit over medical cost ratios and medical costs in general. Government is repricing programs, and it's affecting margins. Companies will fight through it, trading inexpensively, very solid growth metrics. Not afraid to buy any of them, and his choice is ELV.

Health insurance companies have done extremely well and will continue to do so. And this despite continued bombardment to try to tamp down profitability in the sector (its predecessor, Anthem, was trading around $7 a share in 1995). Company expects revenue to grow 10%+ and earnings in low teens. Trades 12-13x earnings. Great setup for long-term hold.

Don't get caught up in the news of the day, think about where it's likely to be in 5-10 years. Use these times of weakness to add to or start a position.

Trades at a cheaper multiple than leader UNH. Likes it.

Their report last week disappointed--their big problem involves Medicaid with their medical cost ratios were much higher. The street saw it as a misstep due to mis-timing.

See UNH comments. The whole US health insurance industry is in turmoil. The industry itself admits there's a problem with how claims are processed and need to be fixed. These companies are necessary in the US health system, and they are for-profit. ELV hasn't traded at this low a valuation since 2013. Hold on.

It is for profit Blue Cross and Blue Shield Insurance and orchestrates insurance across various drug companies as well as administrates health care for the government. There are a couple of headwinds and needs the fundamentals to validate it. He likes the value.