Humana Inc (HUM-N)

Humana has gone from $420 to $500 in the past month. Healthcare stocks are climbing, but he prefers HC insurance than the drug companies, because their earnings are more predictable and trade a lot cheaper. 42% of Americans are obesity, so there's a lot of potential demand for these new, popular diet drugs. However, a lot of these people are also insured. Remember that the drugs space is competitive and eventually new drugs go generic. Insurance doesn't suffer that problem, and there isn't much variability in their earnings (they're more predictable). He also likes UNH.

He added on today's sell-off, which is an overreaction to HUM reiterating weak guidance. The company has a strong record of performance.

He just bought it. Profitable healthcare is a good place to be this year; it's very defensive

That news is distressing. That's unfair. He switched to Humana for coverage, but also bought Humana shares.

They serve 17 million benefits plan members, focusing on Medicare, the fastest-growing segment in US healthcare. Boasts 20% return on shareholder equity, growing earnings at 14% compounded over the past decade. This should continue, given demographics and inflation. Also, in a non-cyclical part of the market in coming quarters. Pullback allows a good entry point.

Closed at $182.52 and his model price is only $129, so it is trading 30% over what it should be valued at. He would be interested in this at $156.