UnitedHealth and 2 More Deep Value Stocks to Buy Before a Triple-Digit Rebound

The stock market has gone through quite a serious recovery rally in the past few weeks. That rally has slowed down more recently, but investors who took the initiative when tariff fears were at their peaks are now laughing their way to the bank. Tech and growth stocks took the brunt of the bearishness, but these stocks have now bounced back by 20-30%, and even more if their businesses were sensitive to tariffs.

Now, tariffs have not only de-escalated, but a recent court order has put a halt to most of the tariffs. The government appealed and managed to get tariffs reinstated. That said, this is a temporary measure, and the government could start being less aggressive on tariffs going forward.

On top of that, recent macro figures have been quite good. Q1 GDP came in at -0.2% vs. -0.3% expected. It’s negative, but it’s nowhere as bad as many would have thought just a month and a half ago. With that in mind, here are some stocks that could recover as long as macros hold up:

UnitedHealth (UNH)

UnitedHealth (NYSE:UNH) is down over 50% from its April highs, and it looks more like a falling knife than value, even though the decline has slowed down. However, I think this could be a once-in-a-decade opportunity to buy the dip.

The biggest decline was from the Q1 2025 earnings disappointment and a full-year guidance cut. They mainly blamed high medical care utilization for that. Its Medicare Advantage business and issues within its Optum Health unit affected reimbursement due to member profile problems.

The CEO shortly resigned afterwards, and the full-year 2025 guidance was completely withdrawn. And right after that, reports came in that the Department of Justice was investigating this company. There are allegations that the company secretly paid nursing homes to minimize hospital transfers. Naturally, plenty of other lawsuits followed.

There are definitely risks here, but those seem mostly, if not fully priced in as shares trade at a 50% discount.

UNH now trades at just 12 times earnings, which is much lower than the historical median of 22 times earnings. If you take out non-recurring items, the earnings multiple drops down below 11 times.

UnitedHealth has grown its revenue by 12.7% annually in the past three years, and future revenue growth is expected at 8.6% annually this decade. On that note, it’s unlikely UNH will trade at such a discount for too long. One bad year shouldn’t hold down the linchpin of the healthcare insurance industry forever.

PDD Holdings (PDD)

PDD Holdings (NASDAQ:PDD) is the parent company of Pinduoduo in China and Temu in the West. Most of its revenue comes from China, but the company has underperformed recently due to the trade war and investment sentiment being against it. Many believe Temu was on the cusp of collapsing due to the Trump administration pulling away de minimis exemptions. However, the recent court order means Trump’s de minimis exemption is in question as well, since that suspension was through “emergency” powers from executive orders. Tariffs have been reinstated temporarily again, but they’re still hanging in the balance.

The most recent decline was due to PDD posting slowing growth and a falling bottom line due to a sharp rise in the cost of revenues and operating expenses, due to aggressive merchant support and marketing subsidies. The decline is expected to reverse in the coming years, and even with the recent bottom-line trends, the stock trades at just 8 times forward earnings.

It is expected to post 9.5% revenue growth for all of 2025 and 21.4% revenue growth next year, along with improving profitability. EPS growth (minus non-recurring items) is expected to be 16.2% annually this decade, and even if sentiment improves enough for Wall Street to pay 15 times trailing earnings for the stock, it could deliver triple-digit returns in the coming years.

The consensus price target of $144.55 implies 46.4% upside potential, but price targets go as high as $224 for the next 12 months.

Six Flags Entertainment (FUN)

Six Flags Entertainment (NYSE:FUN) is going through a post-merger integration with Cedar Fair. It hasn’t been fully smooth, and the combined company reported a $321 million operating loss in Q1. Both companies merged almost a year ago.

Since then, the stock is down 19%. If we zoom out further, Six Flags is down even more from its historical peaks.

FUN stock does not trade cheaply at current earnings multiples, but things could get significantly better as interest rates come down. In 2024, it posted a net loss of $206.7 million. However, EBITDA was $587 million. This loss was mainly due to $234.8 million in net interest expenses.

Even if we look at trailing-twelve-month data, EBITDA was $491 million vs. $293 million in net losses. As such, I see a significant recovery for FUN stock if interest rate cuts continue. Revenue hasn’t declined, and the company is expected to see over 10% revenue growth annually this decade.

It also comes with a dividend yield of 3.48%. The consensus price target of $49.2 implies 42.6% upside, though price targets go to $65.

The post UnitedHealth and 2 More Deep Value Stocks to Buy Before a Triple-Digit Rebound appeared first on 24/7 Wall St..