This jumps to 90.9% for those who have been reinvesting dividends along the way. And in terms of money, that means a £20,000 initial investment in March 2021 is now worth roughly £38,180.

But past performance sadly doesn’t guarantee continued strong gains from America’s flagship index. So is the S&P 500 still a good investment in 2026?

Institutional outlook

There’s a lot of uncertainty plaguing the US stock market at the moment. Beyond concerningly high valuations driven by expected AI-driven earnings efficiencies, the economy’s exposed to a variety of disruptive forces. Most notably is the growing proportion of fragile consumers.

Short-term, tariff-induced inflation is putting pressure on household wallets. And with the labour market starting to show signs of weakening, a growing number of consumers are increasingly dipping into savings and turning to credit cards to help cover the cost of living.

This concerning trend is only expected to accelerate following the breakout of war in Iran, which is anticipated to trigger significant energy and fuel inflation. While some of this pressure’s expected to be eased by income tax cuts as part of President Trump’s “One Big Beautiful Bill”, there are growing fears of a potential recession and a subsequent downward correction of stock prices from multiple analysts.

As a result, most institutional forecasts are only projecting an average 3%-7% annualised growth for the S&P 500 over the next five years. That’s a massive slowdown compared to the 15% average enjoyed since 2021. Therefore, assuming these projections are correct, investing £20,000 into the S&P 500 today may only yield £23,185-£28,051 by March 2031.

But for stock pickers, the returns could be far more substantial…

Exploring opportunities

While the S&P 500 as a whole is looking quite expensive, that’s not the case for all of its constituents. And analysts have flagged several US stocks that could significantly outperform over the next five years. The list includes UnitedHealth Group (NYSE:UNH).

The health insurance group has come under significant pressure of late as the proportion of money paid out in medical claims increased versus the revenue brought in through insurance premiums. And while the shift was relatively small, when applied to its massive $400bn+ insurance book, the impact translated into a 41% year-on-year drop in operating earnings.

However, bullish analysts are arguing that this is only a temporary cyclical problem. So through a combination of premium price hikes as well as improved underwriting discipline, the bottom line will eventually recover. And even Warren Buffett appears to have come to a similar conclusion with a $1.6bn investment in the second quarter of 2025.

Hiking insurance premiums during periods of consumer weakness is a tricky endeavour. And it’s a risk that could backfire if competitors undercut their pricing.

Nevertheless, a successful multi-year recovery could see UnitedHealth shares outperform the S&P 500 at today’s undemanding valuation. That’s why I think investors should take a closer look.

The post £20,000 invested in an S&P 500 index fund 5 years ago is now worth… appeared first on The Motley Fool UK.

Chances to get a better deal than the Oracle of Omaha don’t come around very often. So should investors seize the opportunity and buy shares?

UnitedHealth

UnitedHealth has been through a lot recently. This includes the almost unimaginable event of the company’s CEO being shot on the way to an investor meeting.

Other challenges have included rising medical costs, which haven’t been offset by higher premiums. And the firm is also being investigated in a couple of different ways. 

One focuses on the way the firm classifies its patients. The concern is that it might be exploiting the system to attract higher revenues by aggressively treating patients as more sick than they might be.

Another is concerned with the relationship between the company’s insurance arm and its provision unit. There’s a potential issue of charging competing insurers higher prices.

UnitedHealth’s Q4 earnings were strong as its vertical integration helped limit the effect of higher care costs. But while this helps with the firm’s resilience, there’s a lot of uncertainty.

I think this means investors need to be honest with themselves. It’s one thing for Buffett – an insurance specialist – to see a potential opportunity, but not everyone has this level of insight.

Molina

Molina Healthcare (NYSE:MOH) is another US healthcare provider. Michael Burry might be bullish on the Medicaid specialist, but the share price crashed 33% in response to the firm’s Q4 earnings.

It’s easy to see why – the firm faced a number of challenges. Medical costs increased and changes to the classification system also caused them to receive less money for patients needing more care.

On top of this, there were one-off adjustments and setup costs that dragged earnings down even further. And the company doesn’t expect things to improve until 2027. 

Setting rates is out of Molina’s hands and that means there’s always risk. Importantly, though, the firm has a clear long-term competitive advantage that’s still firmly intact.

Compared to other companies, the firm has much lower costs. This comes from focusing exclusively on government-funded programmes and migrating all new patients onto a single system. 

This puts the firm in a much better position to make it through a downturn in 2026. As a result, I actually see the falling share price as a potential buying opportunity. 

Investing with the best

There’s some disagreement about whether the UnitedHealth investment was made by one of Berkshire’s other managers. But a lot of people think it has the hallmarks of a Buffett investment.

Even so, investors can’t just follow Berkshire into the stock without paying close attention. One of the things Buffett says frequently is that investors should stay within their own circle of competence. 

Molina, however, has some long-term advantages that I think even an investor like me can understand. The firm has a cost advantage over its rivals and it’s easy to see why that’s important.

As a result, I think the crashing share price makes the stock look very attractive. So – for my own reasons – I’m going with Michael Burry over Warren Buffett on this one.

The post Down 25%, should investors buy this stock for less than Warren Buffett? appeared first on The Motley Fool UK.

This can mean some shares can sneak under the radar, with one I’ve spotted having the potential to beat the UK stock market this year. Here’s why.

Keeping people healthy

I’m talking about UnitedHealth Group (NYSE:UNH), the US healthcare giant that’s the largest sector insurer in the country. It makes money from both health insurance premiums and other related medical services.

Over the past year, the share price is down 34%, which is one reason why some might ignore it for 2026. Part of this is due to weaker earnings growth, as cost pressures have led to lower profit margins. Different medical care ratios rose, leading to higher service utilisation and higher claims costs. This remains a risk going forward.

Another factor was more at a sector level. Healthcare’s seen as a more defensive area of the stock market. In 2025, investors were happy to buy riskier stocks from the tech and AI space, which did very well. Therefore, there was some selling pressure on UnitedHealth as investors rotated out of it and into higher-growth sectors.

The tide’s changing

I think things could look a lot different as we progress through 2026. To begin with, the company raised its full-year earnings outlook in its latest report in late October. The CEO flagged that the company is positioned “for durable and accelerating growth in 2026 and beyond“.

This is being driven by a few factors, such as a rising client base, with 795,000 extra clients last quarter versus the same period the year prior. Further, the report noted the financial boost was partly “driven by growth in serving people with complex needs and Medicaid rate improvements”.

Aside from the core business momentum, I think the stock could do well as the fall from 2025 has made it a much more attractive value play. At the start of last year, the price-to-earnings ratio was 31.83. It’s now at 17.55. This drop provides a better entry point for those who were previously waiting for a move lower before buying.

Outperforming the FTSE 100

I think UnitedHealth could beat the FTSE 100 this year. Not only are we seeing stronger demand for medical services, but the defensive angle could really help amid ongoing geopolitical and trade uncertainty. This could cause indices like the FTSE 100 to fall, but UnitedHealth could rally as investors rush to buy it.

Let’s also not forget the FTSE 100 could come under pressure from domestic headaches, such as slow growth. UnitedHealth only has minor exposure to the UK, so it could outperform if the US economy holds firm. This diversification could make it an attractive idea for investors to consider as we start the year.

The post Why this Dow Jones stock could sneakily outperform the FTSE 100 in 2026 appeared first on The Motley Fool UK.

This isn’t the only signal hinting that valuations might be getting stretched in 2025. And yet, despite rising concerns, the ’Oracle of Omaha’ and his team are still buying some US shares.

So what stocks is the billionaire investor buying? And should investors follow in his footsteps?

Buffett’s shopping list

With a reputation for being a value-oriented investor, the fact that Buffett’s buying at a time when valuations are high seems strange, on the surface. But digging deeper, he’s actually still executing the same tried and tested strategy of prioritising value at a fair price.

Two of his recent investments in Nucor (NYSE:NUE) and UnitedHealth Group (NYSE:UNH) seem to demonstrate this perfectly.

So what do these businesses do? And why is Buffett’s team buying them now?

An AI infrastructure play

Nucor is a US steel producer. In fact, it’s one of the largest in the country, operating an expansive network of furnaces that recycle scrap metal into quality steel. This unique approach drastically reduces the cost of manufacturing, giving the group a notable competitive edge over its US rivals – something Buffett loves to see.

With the US imposing a 50% tariff on imported steel, Nucor now looks far more attractive to steel consumers. And when combined with surging steel demand courtesy of artificial intelligence (AI) infrastructure and national electrification spending, the business looks like it could be a new champion within the supply chain of countless US-based businesses.

Combining this with an undemanding forward price-to-earnings ratio of 12.2, it’s not so surprising that Buffett‘s taken an interest.

Of course, there are still risks. Even with tariffs, steel demand remains highly cyclical and sensitive to activity within the construction and industrials sectors.

Since higher interest rates often subdue activity within these industries, Nucor’s growth could prove lacklustre, especially if inflation continues to prove sticky. And if AI infrastructure spending starts to slow, the firm could lose a significant tailwind that’s currently driving it forward.

Defensive healthcare

UnitedHealth’s also another seemingly cyclical strategy the billionaire’s pursuing. The firm’s the largest health insurance provider in the US. And with an ageing population, demand for its services is suspected to steadily trend upward.

That’s potentially great news for shareholders, given that UnitedHealth’s business model is both high-margin and cash-generative. However, given its leading role within the US healthcare (a sector that’s becoming increasingly scrutinised), the company has been getting a lot of attention from regulators.

The Department of Justice is already investigating the firm for anti-competitive practices. And with political pressure to curb healthcare costs, management’s long-term pricing power may be restricted. This, among other factors, is one of the reasons why UnitedHealth shares have tumbled close to 40% in the last 12 months.

The bottom line

For both Nucor and UnitedHealth, Buffett’s bullish stance makes a lot of sense given the long-term opportunities at seemingly reasonable valuations. Therefore, I think it’s wise for investors to dig a bit deeper and see whether or not these US stocks could be a good fit for their own portfolios.

The post With stock prices at record highs, Warren Buffett’s been buying these shares! appeared first on The Motley Fool UK.

Understanding the reasoning

After asking the AI bot to give me the most undervalued stock in the index, it pointed me in the direction of UnitedHealth Group (NYSE:UNH). The stock’s down 47% over the past year, indicating that something significant is happening at the company. However, before I delve into the details, I wanted to see what reasoning ChatGPT would provide to support its decision.

ChatGPT feels it combines unusually attractive valuation metrics with strong fundamentals in a sector that’s broadly depressed relative to the market. It said it believes the stock to be up to 60% undervalued.

When I pressed it for details as to the fair-value models and metrics it was using, it referred me to a few different ones. For example, the trailing price-to-earnings (P/E) ratio of 13.3 and the forward P/E ratio of 16.5, which it said marks substantial discounts to both its historical norms and index-wide averages.

Now, let’s add in my own thoughts. I believe that, as a sector, healthcare is currently undervalued. Investor sentiment has shifted heavily toward technology and AI, leaving steady-growth sectors like healthcare overlooked. Yet the ageing population in both the US and UK, and increased demand for medical innovation, means that I think the sector could outperform going forward.

UnitedHealth stands out within this group because it is the dominant player in health insurance, with diversified revenue streams from insurance, healthcare services, and data analytics.

Adding in my thoughts

The answer provided by ChatGPT is the perfect reason why the AI bot can be useful, but needs to be approached with care. For a start, in some ways it tends to just summarise information that’s out there online. But I also couldn’t find any valid models that actually show a 60% discount to the actual value. The P/E ratios referenced are valid, but ultimately not that cheap (I use anything below 10 as a potential value pick).

A glaring omission was the reason why the stock is down so heavily in the first place. In mid-April, the business reported lacklustre Q1 results, missing earnings estimates. More alarmingly, the company slashed its full-year 2025 profit forecast, citing unexpectedly high medical costs. Just weeks later, CEO Andrew Witty abruptly resigned for personal reasons. His departure triggered heightened uncertainty, as the stock had still not recovered from either event.

Based on these factors, I think there’s a lot of risk associated with the stock right now. I believe it can continue to fall in the coming months, at which point it could start to become genuinely undervalued. But right now, I disagree with ChatGPT that it’s the most undervalued pick in the index and won’t be investing.

The post I asked ChatGPT for the most undervalued S&P 500 stock and this is what it said appeared first on The Motley Fool UK.

The most recent update is a good illustration of this. The name investors are focusing on is US health insurer UnitedHealth Group (NYSE:UNH), but I think there’s a consistent theme across the board. 

UnitedHealth

The challenges UnitedHealth has been facing recently are well-documented. The firm’s earnings per share have been both in decline and short of analyst expectations for the last two quarters.

The big issue has been its Medicare Advantage programme. In short, claims have been more frequent and more expensive than anticipated. 

This is a frequent risk for insurers, who have to price policies in advanace of finding out how much they might have to pay out. But there is something positive about for UnitedHealth. 

The firm’s policies typically last for a year, which means there’s scope to reprice them after 12 months. And this gives the company a chance to make up for any losses relatively quickly.

In the short term, however, earnings have been falling and the situation doesn’t look good. And Buffett’s firm has been taking advantage of the weak share price to make a big investment. 

US health insurance isn’t exactly my strong suit, so I’m not buying the stock myself. But this is a sector that Buffett knows well, so it’s interesting to see Berkshire taking a position.

Other bets

During the second quarter of 2025, Berkshire also added to its stakes in Chevron, Constellation Brands, and Dominos Pizza. All of these look like stocks investors are worried about right now.

Oil prices have come down significantly since the start of the year. And that’s causing producers to be a bit more cautious about which operations they maintain and invest in. 

Halliburton – one of the largest oilfield services companies – recently reported weak demand in several regions. That’s a bad sign for production levels this year, which isn’t good for Chevron.

Elsewhere, the rise of GLP-1 drugs is reported to be weighing on the amount of food people consume. And it’s hard to imagine a more obvious potential victim of this than Dominos.

Anti-obesity medication also seems to be inhibiting alcohol consumption, so Constellation Brands is another company that could be negatively affected. But it also has another issue. 

As the largest importer of wine in the US, the prospect of tariffs creates an additional threat. So it’s fair to say investor sentiment around the stock is generally negative at the moment.

Looking for opportunities

Buffett – or more specifically, Berkshire Hathaway – clearly thinks the market is overestimating the current challenges. And there’s a possibility they might be right. 

The investment in Chevron is almost certainly a reflection of Buffett’s long-term view on oil prices. The Oracle of Omaha has frequently expressed the view that demand will be strong over time.

Both Constellation Brands and Dominos benefit from strong competitive positions. So if the immediate threats are less significant than they seem, these could turn out very well. 

With my own investing, I’ve been looking at other names in these industries. And while I prefer to chart my own course, it’s nice to see Berkshire’s managers having similar ideas.

The post Warren Buffett’s firm is still being greedy where others are fearful appeared first on The Motley Fool UK.

Should investors consider following the investment guru into the health insurance stock? Let’s discuss.

A disaster in 2025

UnitedHealth stock’s historically been a very consistent performer. However, this year, it’s been an absolute dog. One reason for this is that recently, the health insurance company has significantly underestimated the demand for, and cost of, health services in the US. As a result, it has released several major profit warnings (and CEO Andrew Witty stepped down).

Making matters worse, the company’s been embroiled in a couple of scandals. In May, The Wall Street Journal reported that the US Department of Justice was carrying out a criminal investigation into the company for possible Medicare fraud while The Guardian reported that the group had made secret payments to nursing homes to keep residents out of the hospital.

This combination of issues has sent the share price down significantly. At one point recently, it was trading near $240 – about 60% below its highs.

Turnaround potential

So the company’s clearly a bit of a mess right now. However, I think it should be able to turn things around. The CEO is now Stephen Hemsley, who was chief exc of the group between 2006 and 2017 and oversaw a period of huge growth for the business. And he’s confident he can fix things.

Hemsley’s plan involves optimising insurance pricing, improving the company’s ability to anticipate future trends, fixing business practices, and enhancing the consumer and provider experience. He believes that these strategies can result in a return to earnings growth next year.

Attractive valuation

Zooming in on the stock itself, it appears to be priced relatively attractively. Hemsley has now provided earnings per share guidance of $16 this year (versus guidance of up to $30 at the start of the year).

So at today’s share price of $300, the price-to-earnings (P/E) is around 19. That’s below the US market average and it’s not a high multiple for an industry-leading insurer.

It’s worth noting that a lot of analysts believe Hemsley’s ‘kitchen sinked’ the guidance and provided a low earnings estimate that’s beatable. So earnings for the year could come in higher than $16 and make the stock look cheaper.

Worth a look

I’ll point out that a turnaround here could take time. So while the stock’s risen since it came to light that Buffett has bought it, there’s no guarantee it’ll keep rising in the short term.

After multiple profit warnings, the company will have to prove that it’s on top of its insurance pricing. It will also have to win back the trust of institutional investors and this may not be easy.

I believe the stock’s worth considering today however. When an industry leader’s trading 50% below its highs, there’s often an opportunity to capitalise on.

The post Should investors consider following Warren Buffett into UnitedHealth stock? appeared first on The Motley Fool UK.

Here, I’m going to highlight three shares that were snapped up by pros in the second quarter of 2025. Are they worth considering today?

UnitedHealth

First up, we have UnitedHealth (NYSE: UNH), the largest health insurer in the world. This stock was bought by a range of top investors in Q2 including Warren Buffett (for his firm Berkshire Hathaway), David Tepper of hedge fund Appaloosa, Michael Burry (of ‘The Big Short’ fame), and the UK’s Stephen Yiu, who runs the Blue Whale Growth fund.

Now, this company’s share price has shot up since it came to light that Buffett bought stock. Currently, it’s trading at $308 – up 31% from its 2025 lows of $235.

I still believe there’s value on offer, however. At current levels, it’s still almost 50% below its highs and trading on a very reasonable price-to-earnings (P/E) ratio of 17.

It’s worth pointing out that this insurer has had some significant performance issues recently. Ultimately, it underestimated the demand for, and cost of, health insurance in the US and got its pricing all wrong.

It could take a while to turn things around. But I reckon it will get there eventually so I believe it’s worth considering today.

Taiwan Semi

Next, we have Taiwan Semiconductor Manufacturing Company (NYSE: TSM). It’s the largest semiconductor manufacturing company in the world.

This stock was snapped up by a range of top investors including billionaire Stanley Druckenmiller, tech expert Brad Gerstner of Altimeter Capital, and Stephen Yiu again.

The share price here has had an explosive move higher since its April lows. So, the pros may have paid much lower prices for their shares.

I still believe the stock is worth a look at today’s levels though. With the forward-looking P/E ratio sitting at 23, the valuation doesn’t appear to be stretched.

That said, semiconductor stocks can be volatile at times. And I reckon there might be better buying opportunities here in the months ahead.

If there’s talk of an economic slowdown, or increased geopolitical tension, the share price is likely to pull back. That could be a good buying opportunity to think about.

Alphabet

Finally, we have Google and YouTube owner Alphabet (NASDAQ: GOOG). It was bought by billionaires Bill Ackman, who runs FTSE 100 investment trust Pershing Square Holdings and Seth Klarman, CEO of Baupost Group.

It’s great to see big-name buying here. Because I’ve been arguing for a while that this Magnificent 7 stock is undervalued.

There are obviously risks around AI. Today, the way we’re searching for information is changing rapidly.

However, Alphabet isn’t sitting still. It’s rolling out some incredible AI search features.

Meanwhile, the company has the lowest valuation in the Mag 7. At present, it’s trading on a forward-looking P/E ratio of 19.3 (using next year’s earnings forecast).

Add in the fact that this company has exposure to lots of high-growth industries including cloud computing and self-driving cars, and I think the set-up is attractive. To my mind, it’s worth further research.

The post Looking for stocks to buy? Here are 3 shares the pros have been snapping up appeared first on The Motley Fool UK.

Now, there’s no guarantee he’ll put this cash to work, of course. But here’s a look at an S&P 500 stock that I believe fits the Buffett mould.

This S&P 500 stock has tanked

The stock I want to highlight today is UnitedHealth (NYSE: UNH), the largest health insurance company in the US (and the world).

Listed on the New York Stock Exchange, it currently trades for $241. That’s more than 50% below the level it was trading at at the start of the year.

A high-quality company on sale

So why do I think Buffett should be interested in this stock? Well, there are a few reasons.

For a start, we know that Buffett loves insurance companies (they’re very much in his ‘circle of competence’). Over the decades, he’s invested in many different insurers including GEICO, General Re, Chubb, and Alleghany. It’s worth noting here that he has actually owned UnitedHealth stock in the past (for about three years between 2006 and 2009). So I imagine he knows this company very well.

Secondly, we know he likes to invest in high-quality businesses that are out of favour and offer value. That’s what we have here. Over the long term, this insurance company has generated a huge amount of wealth for investors, thanks to its high return on equity (five-year average of 24%) and strong balance sheet. However, this year, it has faced some challenges and its share price has fallen significantly, leaving the stock on a price-to-earnings (P/E) ratio of just 13.5.

Third, he could buy a significant stake in the company. Currently, UnitedHealth has a market cap of $218bn. That’s less than the value of the cash on Berkshire’s books. So, he could buy the whole company if he wanted to and become the owner of the business (Buffett likes to think as a business owner and not a stock market speculator).

Short-term challenges

It’s worth pointing out that Buffett hasn’t given any indication of being interested in buying it and I’m only speculating. Plus, he may be put off by the challenges the insurance company is facing right now. This year, it has lowered its 2025 earnings guidance on several occasions due to higher demand for healthcare, increased medical costs, suboptimal insurance pricing, and some other issues. These issues could persist in the near term. For the stock to rebound, management will have to prove that it’s on top of them.

Given this company’s long-term track record and current valuation, however, I wouldn’t be surprised if we suddenly heard that Buffett was to grab a slice of this business in the months ahead. I see a quality company trading at a reasonable price and I think the stock is worth considering today.

I’ll stress that I’m not saying he will buy the stock. But I do believe it has a lot of the things he looks for in an investment.

The post Down 50% in 2025, I believe this S&P 500 stock fits the Warren Buffett mould perfectly appeared first on The Motley Fool UK.

But there’s no such thing as a completely risk-free stock. Even seemingly stable juggernauts like UnitedHealth, which had a colossal $535bn market cap until last month, can enter crisis mode.

And that’s what has happened with the share price crashing nearly 48% inside a month! Prior to this, the stock had doubled in five years and more than quadrupled over a decade.

Here, I’ll look at what has happened, before assessing whether this fallen S&P 500 angel might be a candidate for my ISA.

Multiple challenges

UnitedHealth makes money in two main ways. First, through its insurance arm, it sells health insurance plans to individuals, employers, and the government (like Medicare and Medicaid). It collects monthly premiums from customers. 

Second, its Optum division provides services like managing prescriptions and direct patient care. This division looks like it could be negatively impacted by President Trump’s executive order to lower US drug prices. 

He stated: “We’re going to cut out the middlemen and facilitate the direct sale of drugs at the most favoured nation price directly to the American citizen.”

OptumRx functions as a pharmacy benefit manager — essentially a middleman in the drug supply chain. So there’s mounting regulatory risk here. 

That’s not all. The company has also faced unexpectedly high medical expenses in its Medicare Advantage segment. This recently led to the suspension of its 2025 financial outlook, followed yesterday (13 May) by the sudden departure of CEO Andrew Witty. 

Cheap valuation

For the full year, Wall Street still expects revenue to rise 12.5% to $450bn but earnings per share (EPS) to fall 9.5% to $25. This gives a low forward price-to-earnings (P/E) ratio of just 13.

Looking further out, double-digit EPS growth is forecast for 2026 and 2027, bringing the P/E ratio as low as 10.

There’s also a 2.7% dividend yield, which is historically high for UnitedHealth. The firm has raised payouts for 16 consecutive years, but there’s no guarantee that will continue.

On balance, the stock looks to offer a lot of value at the current price. The company covers over 50m people and is deeply embedded in the US health insurance system. My view here is that it’s oversold after its 48% crash, and therefore probably ‘on sale’ right now.

However, the fast-changing regulatory landscape and murky outlook for 2025 add too much uncertainty for me. I’d rather invest my money elsewhere for the next few years.

Taking stock

As an investor, I always try to learn lessons from such events. One key takeaway here is that the Trump administration is serious about trying to lower US healthcare costs.

Another thing Trump doesn’t like is high transaction fees, particularly those imposed by major payment networks like Visa and Mastercard. Visa is one of my largest holdings. Could it be the next UnitedHealth?

Well, it’s far more global than US-based UnitedHealth, which is a relief. But significant changes in how much Visa takes in fees could still cause a massive sell-off. Food for thought, at least.

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