$UNH (+1,64 %) UnitedHealth is at the center of a real tragedy right now: the United Healthcare CEO has been murdered and the news has caused quite an uproar - not only within the company, but also on the stock market. The shock is real, but for young investors like us, the question is: what do you do in moments like these? And this is where the legendary quote comes into play: "Invest when the blood is flowing in the streets." Yes, it sounds brutal, but it describes the idea of investing counter-cyclically - especially when the market is reacting irrationally.
What's going on right now?
UnitedHealth is a healthcare titan, with revenue streams from insurance (UnitedHealthcare) and services (Optum). In the last quarter, revenues increased by more than 9%, to over $100 billion. The numbers are strong, demand for healthcare services remains stable, but the short-term uncertainty - caused by this tragic incident - has put the stock on the defensive. Emotional market reactions could create the timing for entry opportunities.
Why could this be an opportunity?
UnitedHealth is more than just a health insurance company. Optum, the healthcare solutions subsidiary, is a growing powerhouse in telemedicine, chronic care and health data. These trends are long-term game changers. Despite the current crisis, the demand for these services remains consistently high - simply due to the ageing population in the USA.
Politics and the long-term outlook
There are challenges: The U.S. government is targeting reforms that could affect everything from drug prices to Medicare access. That means political pressure in the short term. But companies like UnitedHealth know how to adapt - they have the networks, technology and capital to stay ahead. Sure, it won't be a walk in the park, but in the long term, the healthcare sector is a growth market.
What is the competition doing?
Eli Lilly $LLY (+1,78 %) , Huma$HUM (+5,48 %) and CVS Health $CVS (+0,57 %) are not small players, and they are also expanding their market shares. But UnitedHealth has a particular strength: diversification. With insurance AND services, they protect themselves against fluctuations in one of the two segments. The focus on Optum gives them an innovative edge.
What can you take away as a young investor?
Many people are put off by shocks like these, but this could be exactly the moment for you to get involved. Of course there are risks, especially from regulatory uncertainty. But if a company's fundamentals are strong - and UnitedHealth's are - then it's worth taking a closer look.
In the long term, this crisis could turn out to be an opportunity. The only question is: do you have the courage when others shy away?
