We recently published a list of the 10 most promising low-cost stocks by hedge funds. In this article, we’ll take a look at how Elevance Health, Inc. (NYSE:ELV) stands compared to some of the other most promising low-cost stocks.
Inflation data suggests less than 50bps rate cut
Consumer price index data for September showed that consumer prices were much higher than expected. On October 10th, Inflation Insights President Omail Sharif appeared in an interview with Yahoo Finance and discussed market theory amid rising consumer prices.
Sharif stressed that although the inflation statistics were higher than expected, housing inflation was starting to calm down a bit. He also added that food prices have fallen significantly since the post-COVID-19 outbreak, hinting that there are many benefits to be gained from the current market situation.
Mr. Sharif suggested that the market is not yet at a stage where the Fed is concerned about the current situation and that expectations for a 50 basis point rate cut in November have been dispelled. His market theory is that a 25 basis point rate cut in November is the best bet.
The bull market reaches its second anniversary
As the Street marks the second anniversary of its bull market, the market is poised for big changes. On October 11, Matthew Palazzolo, senior investment strategist at Bernstein Private Wealth Management, appeared in an interview with Yahoo Finance to discuss the outlook for the market.
Palazzolo suggests that the Fed’s monetary policy is probably the biggest risk to the bull market right now. He added that the Fed will continue to cut rates in 2025. Although returns are expected to be modest, this scenario is expected to be quite favorable for equity investors.
He added that the market is expected to expand further from the grand seven companies and that their valuations will rise relatively slowly. Palazzolo emphasizes that lower-cost names offer greater opportunities. He also suggests that companies outside of the Big 7 are more in line with their long-term averages.
our methodology
We used the Finviz stock screening tool to find the most promising low-cost stocks according to hedge funds. We set a forward P/E ratio of less than 15 to obtain a list of undervalued stocks with market caps greater than $2 billion. We then examined hedge fund sentiment for these stocks as of Q2 2024 and selected the most popular ones. Stocks are sorted by ascending number of hedge fund holders as of Q2 2024 as a primary metric, and ascending forward P/E ratio as of October 13 as a secondary metric.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
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Elevance Health (ELV): Top low-cost stock with strong financials
Healthcare professionals working at computers and using the company’s digital solutions to improve the quality of care for consumers.
Elevance Health Co., Ltd. (NYSE:ELV)
Number of hedge fund holders: 73 people
Forecast PER as of October 13, 2024: 13.47
Elevance Health, Inc. (NYSE:ELV) ranks #9 on hedge funds’ list of most promising low-cost stocks. Elevance Health, formerly known as Anthem, Inc., is now a prominent health benefits company in the United States.
In the second quarter of 2024, Elevance Health, Inc. (NYSE:ELV) generated revenue worth $43.2 billion and adjusted operating income of $2.8 billion. In addition to this, the company has generated $2.4 billion worth of operating cash flow since the beginning of the year. As a regular dividend payer, the company pays a quarterly dividend of $1.63 per share, which equates to cash distributions of $378 million.
On October 1, the company announced its 2025 Medicare Advantage Plan. Elevance Health, Inc. (NYSE:ELV) plans to offer flexible Medicare Advantage plans with personalized benefits to approximately 40.3 million eligible consumers in 23 states across the United States, according to a report. In addition, the company’s affiliated health plans serve 2.9 million Medicare members, and in 2025 Elevance plans to go beyond healthcare to provide personalized care to its customers.
Overall, the company’s financial results were driven by a diversified portfolio and efficient execution of strategic initiatives. Elevance Health, Inc. (NYSE:ELV) has strong fundamentals that position it as an important company in its industry. The 119 million strong customer base is a testament to the company’s position in the industry.
Artisan Partners’ Artisan Select Equity Fund says this about Elevance Health, Inc. (NYSE:ELV) in its Q2 2024 investor letter:
“The biggest contributors to the quarter’s results were Alphabet, Lam Research, and Elevance Health (NYSE:ELV). Elevance stock rose 5% in the quarter. Despite a flat top line, the company has largely overcome challenges related to Medicaid redetermination, which caused temporary fluctuations in membership and utilization levels. Elevance’s vertical integration strategy is gaining momentum, with its Carelon Services business seeing strong sales and profit growth. Elevance’s stock trades at 13 times earnings, which is a long-term gain of over 12%. This is a very attractive investment proposition for a durable business with potential for profit growth.”
Overall, ELV ranks 9th on the list of most promising low-cost stocks according to hedge funds. While we see ELV’s potential as an investment, we believe AI stocks have a better chance of delivering higher returns in a shorter time frame. If you’re looking for AI stocks that are more promising than ELV but trade at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
