Let’s close out the recession-resistant theme this week with a sector that people will literally die without.
I’m talking of course, about healthcare – a $3.5 trillion market that’s expected to breach the $6 trillion-a-year mark in 2030.
Of course, not all segments of healthcare are recession-resistant. Some are quite the opposite – so we must be smart in our picks.
Today’s pick is a stock that hasn’t been faring well amid the tech-led rally. But this has also created a prime entry opportunity – allowing you the chance to buy “recession insurance” via this stock at a cheaper price.
And don’t let its stock price decline fool you – this is a solid stock with very healthy fundamentals, which is why I see its current price as an opportunity.
The Cigna Group (CI)
Health insurance giant Cigna has seen its stock fall by nearly 20% this year.
But that also means it’s currently trading at a price-earnings ratio of under 12x – compared to over 22x for its larger rival, UnitedHealth Group. Its price-to-sales ratio is only 0.44x – compared to 1.42x for UnitedHealth Group.
Yet Cigna’s earnings-per share have grown by 13% yearly for the past four years. The company is targeting yearly earnings growth of 10% to 13% – showing that it’s confident it can maintain its growth.
Cigna also uses 20% of its operating cash flow for dividends, and the rest for share purchases and strategic M&A – resulting in a modest, though steady dividend.
But essentially, the case for Cigna is such – the need for healthcare insurance won’t be going anywhere in a recession. And Cigna is a solid stock that is now trading at what looks to be highly undervalued territory.
Therefore, now may be the time to strike and add this stock to your portfolio.
To your wealth,
Felix @ Ace of Investing