One of the notable lessons in value investing is this: boring is oftentimes a good thing. Tangible proof of this principle is to be found in Anthem Inc (ANTM), which is a virtually inconspicuous stock but is performing satisfactorily for its investors.
Here’s a brief background on this relatively obscure stock.
Anthem is offering various healthcare plans to corporations and individuals. The holding company also provides its services to Medicare and Medicaid markets, which are comprised of approximately 40 million Americans.
Aimed at becoming a one-stop-shop for its clients’ insurance needs, the company’s offerings include dental and vision services and life insurance. To date, Anthem is ranked among the top five healthcare and insurance providers in the United States while it placed No. 29 among Fortune 500 companies. Clearly, this “unknown” stock is one of the industry leaders today.
Where does Anthem currently stand?
While the healthcare industry seems to be struggling with countless changes courtesy of the Trump administration, Anthem appears to be well prepared to handle whatever comes its way.
Here’s a case in point.
Anthem had to retrench on their Obamacare services last year. Despite that, the company still impressed its investors with a 3.8% improvement in its operating revenue year over year. That's not bad for an insurance company.
How did the company manage to recoup its losses? The lost revenues from Obamacare were counterbalanced by a boost in new insurance premiums along with an increase in the number of Medicare enrollments.
Since its fourth-quarter results in 2018 pleasantly surprised investors and analysts alike, it’s anticipated that Anthem will perform just as well or even better this year. So far, predictions for Anthem’s performance in 2019 remain bullish.
The stock market noticed. Since October, the stock has gone ballistic, rocketing an impressive 30%.
However, no company is perfect. One major red flag for Anthem is its ongoing lawsuit against another healthcare provider, Cigna (CI), over their botched merger plans. If the legal battle continues, then Anthem is poised to incur substantial long-term expenses.
All in all, Anthem is a solid stock that offers an attractive combination of stability and continuous long-term growth in anyone’s portfolio. Thus far, the company has performed well and managed to provide acceptable financial results to its investors.
Although its business has not grown by leaps and bounds, its modest growth in the past years and the projected consistency in its stock performance in the years to come make Anthem a reasonable investment.
Buy Anthem on the next decent dip.