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UnitedHealth Group (UNH)

This large health care insurer beat estimates by a nickel last quarter, posting EPS of $0.64.

UnitedHealth Group (UNH)

UnitedHealth Group (UNH) is one of the largest health care insurers in the U.S. It also provides information and technology-enabled health services through its Optum division.

The shares hit a high of $126.21 on August 18 before being temporarily knocked back by the stock market retreat. They fell all the way to $95 in intraday trading on August 24 before a few investors realized they were a screaming bargain at that price and bought in. The stock ended last week at $118.70.

The company recently reported strong second-quarter results that came in ahead of expectations. Revenue for the quarter was $36.3 billion, up 11% from $32.6 billion in the same period of 2014. Net earnings were just under $1.6 billion ($1.64 per share) compared to $1.4 billion ($1.42 per share) in the year-ago period. For the first half of the fiscal year, the company earned $3 billion ($3.10 per share), up from $2.5 billion ($2.52 per share) in 2014.

The company also provided an improved outlook for the rest of this year, based in part on its acquisition of drug benefits company Catamaran Corp. for $12.8 billion. That deal closed in late July.

UnitedHealth now projects 2015 revenues of approximately $154 billion, an increase of $11 billion from before. Net earnings are expected to be in a range of $6.25 to $6.35 per share, an increase from the prior outlook of $6.15 to $6.30 per share. The company projects 2015 cash flows from operations of $8.4 billion to $8.6 billion, an increase of $200 million from the previous outlook.

Investors are benefitting from United Health’s success. In June, the company increased its quarterly dividend by one-third to $0.50 per share ($2 annually). As well, the company continued to actively buy back its stock. During the quarter, it repurchased $57 million worth of shares, bringing year-to-date repurchases to more than 8.5 million shares for $953 million.

UNH is a Buy.

Gordon Pape, The Internet Wealth Builder,, 1-888-287-8229, September 14, 2015