Humana (NYSE:HUM) is one of the largest health insurance companies in the United States. Shares fell 0.65% on July 2 and the stock is down 9% in 2019 so far. Humana is trading well into the low end of its 52-week range.
Health insurance companies have been churning out tidy profits over the past decade, but political threats are spooking analysts.
Health insurance stocks took another beating after the back-to-back Democratic debates that took place last week. Most of the top contenders have pledged to pursue a Medicare-for-All plan and wage war against the private health industry.
Former Vice-President Joe Biden, the current frontrunner, prefers to build on the Affordable Care Act. He saw his lead shrink significantly in the polls after the first two debates, with Senators Kamala Harris and Elizabeth Warren receiving big bumps.
Anxiety has eased somewhat as we head into the summer. Donald Trump is still the odds-on favourite to win the general election. However, if one of the top Democrats pledging Medicare-for-All does come out on top, a compromise is the safer bet. This means that the downward pressure felt right now should be an opportunity for investors to gain an entry point into stocks like Humana.
Humana is a particularly attractive target that has posted earnings beats for four consecutive quarters. It boasts a favourable forward P/E of 14 and the stock had an RSI of 51 at the time of this writing, putting it in neutral price territory. There is a lot to like about Humana priced below the $270 mark.
