We recently published a list of 10 Most Undervalued High Quality Stocks to Buy According to Analysts. In this article, we are going to take a look at where UnitedHealth Group Incorporated (NYSE:UNH) stands against other most undervalued high quality stocks to buy according to analysts.

Is a Market Rally Around The Corner?

In one of our recent articles, titled 11 Best Undervalued Stocks to Invest in Now, we talked about how the recent tariffs have caused a slowdown in the market and are likely to cause inflation. Here’s a piece from the article:

“Today, Richard Fisher, former Dallas Fed president, appeared on a CNBC interview to talk about the recent tariffs and their impact on the market. Fisher stated that a tariff is a cost factor that goes into producing and distributing a product, making it a form of tax. Business operators of all sizes have to figure out a way to protect their margins against the impact. On the other hand, the Federal Reserve has to gauge the amount of revenue it would generate from these tariffs considering it is slowing down the economy and can cause inflation as the companies will have to raise prices to maintain their margins. Moreover, Richard Fisher noted that such tariffs take a long to be digested, as businesses don’t change something overnight. The only way for companies to maintain their margins without increasing prices is by increasing productivity, which again does not happen overnight and takes time.”

On March 6, Tom Lee, managing partner and head of research at Fundstrat Global Advisors appeared on a CNBC interview to talk about how the market is likely to proceed forward from here. Lee stated that he is still optimistic about the market, he acknowledged that investors are sitting out at the moment as they are trying to assess the severity of these tariffs. However as a result the market is seeing a big price correction and a decline in sentiment. Moreover, Lee noted that we also had a bad ADP jobs report and the market is going up on bad news which he believes is good for the market.

Lee explained what has happened during the six weeks essentially represents a bear market that has swept through sentiment and positioning because if we look at the hedge funds positioning it has almost gone neutral. Lee believes because of this the current and two upcoming months can be huge rally months, where the market can be rallying as much as 10% to 15%.

While answering the question of whether this slowdown is a Buy, Lee noted that the 10 best days happen every year for the market. Last year the 10 best days of the year added up to 21% to the S&P 500, excluding these 10 days the market was only up 4%. He explained that markets don’t get 20% gains throughout the year, it is those 10 best days where the market rallies the most. Lee thinks that these 10 best days for 2025 are near because if the economy is near stall speed, the “Trump Put” will come back, otherwise, the market has to unwind all this austerity. Moreover, if the job market is soft, the “Fed Put” comes back into play, because the Fed does not want the stall speed to linger. Lee thinks these two things are going to be the positive catalysts in the next couple of weeks.

Our Methodology

To compile the list of the 10 most undervalued high-quality stocks to buy according to analysts, we used the iShares MSCI USA Quality Factor ETF. Using the ETF we aggregated a list of high-quality stocks trading below the S&P 500’s forward P/E ratio of 22 as per the Wall Street Journal. Next, we checked the analyst upside potential for each stock from CNN and ranked the stocks in ascending order of the upside potential. We have also added the number of hedge funds holding each stock, sourced from Insider Monkey’s Q4 hedge funds database. Please note that the data was collected on March 6, 2025.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A senior healthcare professional giving advice to a patient in a clinic.

UnitedHealth Group Incorporated (NYSE:UNH)

Forward P/E Ratio: 15.94

Number of Hedge Fund Holders: 150

Analyst Upside Potential: 33.44%

UnitedHealth Group Incorporated (NYSE:UNH) is a large healthcare company that operates through two main business segments including Optum and UnitedHealthcare. Through Optum the company provides a variety of healthcare services, including data analytics, pharmacy services, healthcare delivery, and population health management. On the other hand, the UnitedHealthcare segment offers health insurance and benefits to different groups.

On March 5, J.P. Morgan analyst Lisa Gill maintained a Buy rating on the stock. The positive outlook from the analyst was based on the recent legal developments involving the company and the Department of Justice. Gill noted that the Special Master’s report recommended granting UnitedHealth Group Incorporated (NYSE:UNH) motion for summary judgment, indicating that the DOJ failed to adequately prove that UnitedHealth knowingly retained overpayments from unsupported diagnosis codes. This suggests a higher burden of proof for the DOJ, which is seen as a positive development for the company.

During the fiscal fourth quarter of 2024, UnitedHealth Group Incorporated (NYSE:UNH) reflected growth across both its business segments. The company grew its 2024 revenue by 8% year-over-year to reach $400.3 billion. The results were driven by growth in domestic consumers served under UnitedHealthcare which grew to 2.1 million and value-based clients served under Optum which grew to 600,000. It is one of the most undervalued high-quality stocks to buy according to analysts.

Polen Focus Growth Strategy stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2024 investor letter:

“We trimmed our positions in UnitedHealth Group Incorporated (NYSE:UNH), Amazon, ServiceNow, and Gartner during the quarter. We trimmed our position in UnitedHealth to fund the purchase of CoStar Group. Despite short-term margin headwinds, our long-term expectations for UnitedHealth Group remain virtually unchanged, with the trim simply reflecting what we view as a superior investment alternative.”

Overall, UNH ranks 2nd on our list of most undervalued high quality stocks to buy according to analysts. While we acknowledge the potential of UNH as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

 

Disclosure: None. This article is originally published at Insider Monkey.