- UnitedHealth’s share plummeted on Q1 results.
- The share price now looks clearly undervalued.
- The bigger question is whether now is the time to buy, and which dividend stocks could offer better value.
- Looking for actionable trade ideas to navigate the current market volatility? Subscribe here to unlock access to InvestingPro’s AI-selected stock winners.
It’s been an eventful few months for UnitedHealth Group (NYSE:UNH) shares, which hit an all-time high of $630.73 on November 11, 2024, before plummeting in December following the murder of CEO Brian Thomson.
In February, the stock was then affected by concerns over its pending merger with Amedisys (NASDAQ:AMED). The shares had then fallen to a low of $438.50 on February 21.
The stock climbed steadily and reached a high of $606.36 on April 11, gaining 38% in under two months. But the rally quickly reversed, plunging to $417.12 on Tuesday—its weakest level since October 2021.
UnitedHealth faced a sharp decline following the release of its quarterly results, dropping 22.38% on April 17 and another 6.34% on April 22 after the Easter break. The company reported earnings and sales below projections and revised its forecasts downward for the upcoming quarters.
Since then, the share price has appeared to stabilize, raising optimism that the worst may be behind. This presents an opportunity to evaluate whether the sharp drop could offer a buying chance.
Analysts now consider the stock to be undervalued, with an average target price of $573.53—representing a 34% upside from its current level.
Additionally, UnitedHealth’s InvestingPro Fair Value, derived from several established financial models, is pegged at $541.85, indicating a potential increase of 26.6%.
Beyond the substantial upside potential, UnitedHealth shares also offer a dividend with an annual yield of nearly 2%. This payout has been steadily increasing for 15 years, and with a payout ratio of 34.9%, there is ample room for further dividend growth.
With significant upside potential and a strong dividend, UnitedHealth offers the possibility for investors to reap rewards on both fronts. However, as the stock has only recently stabilized, it still carries some risk.
Fortunately, other US stocks with robust upside potential and high dividends are also available.
6 US Stocks Offering High Dividends, Strong Growth Potential, and Financial Stability
A search conducted this Thursday using the Investing.com screener and exclusive InvestingPro metrics identified six US stocks that meet all of the following criteria:
- Dividend yield above 5%
- Upside potential of more than 30% based on InvestingPro Fair Value
- Upside potential of over 30% based on analyst targets
- InvestingPro Health Score greater than 3 out of 5
It is worth noting that the dividend yields for these stocks range from 5.4% to 13.9%. Their upside potential, based on InvestingPro Fair Value, falls between +34.1% and +55.5%, while analyst price targets point to possible gains of +41.4% to +91.8%.
If you are an InvestingPro+ subscriber, you can access this preset search directly in the screener by following this link.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.