UNH: Opportunity in Insurance Through Call Spreads and Margin Recovery

about 21 hours ago

"The final one, which is by far the most hated sector, is insurance, and the stock that I own is UNH, United Healthcare. Many of you asked, "What have you done on the dip?" and although I didnt buy the dip, I bought call spreads on UNH for June 2027, which are up about 74%. United Health fell significantly in 2025 due to underestimated medical costs, but they are addressing this by raising prices and exiting unprofitable plans. Their pricing strategy is intensely focused on margin recovery and moving back towards an earnings per share growth target of 13%. With strong cash reserves and a history of significant stock buybacks, I believe 2026 could be an amazing year for UNH."

The speaker presents United Healthcare (UNH) as a contrarian investment in the insurance sector. Despite a significant dip in 2025 driven by cost misestimations, UNH is repositioning itself through price hikes and plan exits to recover margins. The speaker has already capitalized on this by buying call spreads, which have appreciated dramatically, signaling a bullish outlook for 2026 supported by robust fundamentals and potential buybacks.

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