WallStNewsletters.com Full Monte contributor Chad Brand, aka. the Peridot Capitalist wrote last week about a company the Masters have been keeping a watch on, UnitedHealth Group Inc. (NYSE:UNH). Besides Warren Buffett buying more shares the stock has rallied 7% in the past three days and it is still less than $3 from its 52-week low.

First off, be sure to check out Chad’s article - Election Worries Have Put HMO Stocks Like United On Sale.  Chad had this to say:

The combination of political risk and a recent acceleration in healthcare cost inflation have investors nervous. The stock has fallen from a high of more than $59 in December and hit a new 52 week low on Thursday, trading below $32 per share. This dramatic 45 percent decline leaves UNH trading at merely 9 times trailing earnings. Such a meager valuation indicates that Wall Street is genuinely concerned that a Democrat in the White House could cripple the fortunes of the HMO industry.

History has shown, however, that wide sweeping changes are rarely accomplished in Washington DC, especially when the issue is as complicated as the broken U.S. healthcare system. Even small, productive changes are difficult to attain when politicians and lobbyists are involved in decision making that is trying to make life better for the American electorate. In other words, using history as a guide seems to indicate the current pessimism on Wall Street regarding the HMO industry may prove to be overdone. The near term headlines could very well spook investors further as the election approaches, but getting arguably the best managed HMO company in the country for 9 times trailing earnings looks like it could turn out to be quite a bargain.

Then there’s the Buffett angle, Buffett’s Berkshire Hathaway Inc. has raised its holdings in UnitedHealth (NYSE:UNH), adding 400,000 shares to bring its total holdings to 6.4 million shares.

Fellow Masters, we all know that Baby Boomers are going to help drive this stock up in the years to come as they give UNH more business everyday with their laundry list of medical wants and needs.

The analysts covering the stock have dropped their target prices lately, but it’s not the end of the world:

Consider where the stock is trading today, Masters, you make the call but I’m giving UNH the ol….

Disclaimer: No positions in UNH.

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