Should I Buy CVS Health (CVS)? Finance YouTuber Analysis

The YouTuber owns a small piece of CVS, having initially liked its merger with Aetna. He believes they haven't fully capitalized on synergies but is watching to see if performance improves over time, currently just holding his position.

“I do have a small piece in CBS and it's one of those that I'm watching to see if it gets better as time goes on, but for now I'm just leaving it in bullpen to see where it goes.”

CVS Health is highlighted as a rebound stock benefiting from a turnaround in Medicare Advantage and other strategic changes. The company has seen significant MA enrollment growth and has implemented a $2 billion cost-cutting plan under new management, supported by an activist investor. Despite the recent rally, the stock is still considered undervalued, with a potential return to 0.3 times price-to-sales suggesting a $93 share price.

“I highlighted CVS as a rebound stock in December on that turnaround in Medicare Advantage as well as some other factors.”

The analyst highlights CVS Health as a healthcare stock with strong growth prospects and relatively low valuations. The healthcare sector is expected to post high earnings growth while being one of the cheapest sectors relative to its long-term average, making CVS an attractive investment.

“I've been highlighting healthcare stocks since January on this forecast for runaway growth and still low valuations. Highlighting pharmaceutical names like Merc and Eli Liy along with CVS Health ticker CVS and insurers like Humanana.”

The YouTuber includes CVS Health as another Medicare Advantage stock to watch, noting it has 'multiple levers to unlock that value.' He sees it benefiting from the same policy tailwinds expected for the sector under a new administration, offering a protective element to a portfolio.

“In that theme I'm watching United Healthcare ticker UNH CVS Health which has multiple levers to unlock that value but really it's here it's human ticker hm could beat them both”

The YouTuber suggests CVS Health as a buy, noting its attractive valuation and strong business case, particularly compared to Walgreens. He highlights CVS's significant presence in the Medicare Advantage market through its Aetna acquisition and its aggressive growth in enrollment, along with a low P/E ratio of seven times expected earnings and a 6% dividend.

“CVS still trades at a very attractive valuation and as a stronger business case than WBA shares trade for just seven times unexpected earnings and pay a 6% dividend”

The YouTuber recommends CVS due to its aggressive growth in the Medicare Advantage market, which could benefit significantly from anticipated policy changes. He notes its low valuation (14x P/E, 0.19x sales) and potential for upside surprise, despite concerns about its debt load.

“Those low expectations could set the stock up for a surprise upside and it's one of the cheapest on terms of valuation trading at just 14 times on a price to earnings basis and just. one n times sales.”

Despite the retail pharmacy industry being in disarray, the analyst believes CVS Health, as the dominant leader, will survive and eventually rebound. This makes it a good deal within the healthcare sector, which has underperformed but offers long-term value.

“the retail pharmacy industry is in shambles but CVS Health ticker CVS here is still the dominant leader in that group and Will Survive to a rebound eventually”

The analyst recommends buying CVS due to its strong performance against the market selloff, expected revenue and earnings growth, and a history of beating expectations. He believes the 'triple-demic' will lead to an upside surprise in Q4 earnings, especially given CVS's extensive customer data from vaccine deployments, which could drive store traffic.

“CVS is we're expected to report its fourth quarter or an earnings on February 7th there of course CVS collected the contact information for tens of millions of people during That vaccine deployment that's really why I like CVS I've been watching CVS is because I think they have all of that data for people that contact information for people and they're likely to benefit from it when it comes to trying to get people to come back into the stores.”

The YouTuber notes that Michael Burry sold his entire position in CVS. No specific reasons are provided for this sale beyond it being part of a broader trend of selling out of 'big names'.

“CVS he sold out of toast Oracle booking holding alphabet and Warner Brothers Discovery even Amazon sold out of that position entirely”

The YouTuber sold CVS Health shares due to being overinvested in the US health insurance market, as they also hold UnitedHealth Group. They wanted to diversify away from having two major health insurers in their portfolio.

“ich habe mich jetzt von CVS health getrennt ich habe die Aktien verkauft aus meinem privaten Depot warum ich die Aktie verkauft habe aber insbesondere welche Aktie stattdessen mir ins Depot geholt habe und warum fährst du in diesem Video zu CVS s habe ich ja bereits ein eigenes Video abgedreht kurz nachdem die neuen Zahlen rauskamen und die Aktie abgetaucht ist du erfährst das ganze hier in dem Video ich verlinke das auch gerne es gibt einen ganz besonderen Grund noch speziell warum ich mich von CVS he getrennt habe und das ist ich war überinvestiert quasi in den amerikanischen verich krankenversicherungsmarkt denn ich habe auch bei der United health Group zugeschlagen der auch mal recht günstig noch in diesem Jahr zu haben war hat dann quasi zwei Krankenversicherer im Depot und jetzt wollte ich einen loswerden das war CVS self und stattdessen habe ich jetzt eine andere Aktie reingeholt die auch eine Hoh Dividendenrendite hat die auch meines Erachtens günstig bewertet ist aber eben kein Krankenversicherer mehr ist”

The analyst suggests CVS Health is a potential buy for investors who believe Medicare reimbursement rates will improve and that the company's management can successfully complete its transformation into an integrated healthcare provider. The stock is currently trading at a low P/E ratio of 7.2, significantly below its 10-year average of 12, and offers a 4.6% dividend yield. Despite recent earnings downgrades due to Medicare Advantage issues, the dividend appears secure, and the company has a strong free cash flow.

“wer glaubt dass Medicare nach wie vor oder wieder profitabler wird weil die vergütungsätze wieder stärker erhöht werden hängt natürlich auch ein bisschen mit der Inflation zusammen wie wie die sich entwickelt wieder als Kostentreiber und wer glaubt dass dem Konzern der Umbau zur zum vertikalen Gesundheitsdienstleister gelingt weil das Management gut ist für den ist die Aktie ab definitiv interessant”

The analyst recommends buying CVS Health, citing its strong revenue and EBITDA growth, robust free cash flow, and manageable debt levels. He believes the stock is undervalued, trading at a lower multiple than its competitor despite superior fundamentals, and expects a market multiple expansion, earnings growth, and share buybacks to drive a high internal rate of return.

“This stock is well priced given a conservative forecast. We're growing ebit.3 percent it historically grew at eight percent... I'm going to give it a good which is the highest rating we give. I'm going to also caveat but I think it's a trifecta opportunity.”

CVS is recommended as a strong hold during a recession due to its consistent growth in revenue and earnings, strong free cash flow generation, and manageable debt levels. The company's ability to generate 12% free cash flow yield makes it attractive for long-term holding, especially given its essential services.

“not bad sitting in a company during a rest session that's kicking off twelve percent of cash generating cash you're gonna sit there and hold it for a long long time”