Oscar Health, Inc. (OSCR): A Hot Stock to Buy Now

We recently compiled a list of the 10 Best Hot Stocks To Buy Right Now. In this article, we are going to take a look at where Oscar Health, Inc. (NYSE:OSCR) stands against the other hot stocks.

While the market is seeing significant positives after the Fed rate cut, there have been some pressures. For example, dockworkers from the International Longshoremen's Association (ILA) have gone on strike at major U.S. ports along the East and Gulf coasts, marking the first such strike in nearly 50 years. The dispute involves a six-year contract covering 25,000 workers, with the ILA demanding significant wage increases and addressing concerns over automation.

While the US Maritime Alliance has offered wage and pension boosts, negotiations have still stalled. The strike could cause major disruptions to imports, especially food, clothing, and car shipments, with potential economic losses of $4 or $5 billion per week.

Moreover, CBS reported that Hurricane Helene is projected to be one of the most expensive storms in U.S. history, with Moody's Analytics estimating property damage between $15 and $26 billion. AccuWeather forecasts that the overall damage and economic loss could reach up to $110 billion.

Central Banks, Port Strikes, and Inflation Risks: What Lies Ahead

Deepak Puri, Deutsche Bank Private Bank CIO of the Americas, recently joined CNBC's 'Money Movers' as he discussed the current high expectations in the U.S. economy and noted that while inflation and employment are relatively stable, challenges lie ahead due to factors like the port strike, global conflicts, and post-hurricane reconstruction.

He mentioned that Chicago Fed President, Austan Goolsbee has highlighted the difficulty in maintaining the current economic balance. Puri advises patience in the markets due to various uncertainties, including the upcoming election.

Puri explained that while many central banks are lowering interest rates, it is uncertain whether the U.S. economy will avoid a downturn. Inflation remains a risk, and the U.S. port strike could cause serious economic problems if it lasts long, even though it hasn’t yet impacted the market much. He warned that several issues combined could affect inflation and overall economic performance.

When discussing the balance between inflation and jobs, the CIO said that concerns about the job market were bigger until recently, but now inflation is becoming more of a risk. He highlighted how challenging it is for the Fed to manage this situation, especially as consumer spending remains steady but is shifting. Meanwhile, sectors like housing and manufacturing, which are sensitive to interest rates, will need to take up the slack.

Finally, Puri talked about whether the Fed could pause rate cuts like the European Central Bank did. He thinks the Fed will keep lowering rates, but the size of future cuts will depend on upcoming labor market data.

Our Methodology

For this article, we made a list of the top 55 best-performing stocks on a year-to-date basis with a market cap of over $2 billion, as of October 1. We narrowed our list to 10 stocks that were most favored by analysts. The best hot stocks to buy right now are listed in ascending order of the average price target upside. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A close up of a patient and a healthcare professional engaging in conversation, showing the company's commitment to patient care.

Oscar Health, Inc. (NYSE:OSCR)

Number of Hedge Fund Holders: 40

Year-to-Date Share Price Gains: 126.70%

Average Price Target Upside: 35.00%

Oscar Health, Inc. (NYSE:OSCR) is a health insurance and prominent healthcare technology company. It is centered on a comprehensive technology platform that prioritizes member service. The company aims to disrupt traditional healthcare practices and is committed to providing accessible and affordable health solutions. It is one of the best hot stocks to buy.

It offers Individual and Family health plans, along with technology-driven solutions through its +Oscar platform. The technology improves user experiences, cultivates strong member engagement, and delivers high-quality clinical care, earning the trust of approximately 1.6 million members as of June 30, up 63% year-over-year.

Oscar Health (NYSE:OSCR) provides several benefits to its members including ease of access to nearby doctors, hospitals, and pharmacies that accept Oscar plans, with options tailored to their language, race, ethnicity, and health history. Additionally, each member has a dedicated Care Team to assist with inquiries and help locate quality care while saving money.

Members also benefit from Virtual Care, which allows them to consult with providers anytime for no additional cost, and in some regions, $0 for Oscar Primary Care. Moreover, many commonly prescribed medications are available for just $3, and prescriptions can be managed through the Oscar app. The app also provides features for accessing care, refilling medications, viewing digital ID cards, messaging Care Teams, and checking benefits.

On August 8, Wells Fargo analyst Steve Baxter maintained a Buy rating on Oscar Health (NYSE:OSCR) with a price target of $27.00 due to its strong financial performance and a positive outlook. In Q2, its adjusted EBITDA reached $104 million, exceeding expectations, with revenue growing by 46% year-over-year.

The company raised its guidance for revenue and adjusted EBITDA by 8% and 23%, respectively. Oscar also demonstrated effective cost management, improving its medical loss ratio and reducing SG&A expenses.

Longleaf Partners Small-Cap Fund stated the following regarding Oscar Health, Inc. (NYSE:OSCR) in its fourth quarter 2023 investor letter:

“Oscar Health, Inc. (NYSE:OSCR) – Health insurance and software platform Oscar Health was the top contributor in the fourth quarter and for the year, after the stock price appreciated over 270% in 2023. Oscar was a top detractor in 2022 and highlights the importance of pragmatically revisiting the case for our decliners and not panic selling or adding too early on price declines. It is also a good reminder that game-changing value creation can come in unexpected ways, as it did with Mark Bertolini joining as CEO at Oscar this year. We couldn’t have modeled this as a driver, but we did recognize the stock price had become unduly punished alongside most tech-related businesses in 2022 and had confidence the business would rebound strongly. We remained engaged with management and the board to encourage proactive steps to close the extreme value gap. Oscar did benefit from a general rally in tech businesses coming out of 2022 weakness, but the positive price movement was primarily a direct reflection on the management upgrade and operational execution. Mark Bertolini brings significant operational expertise, as well as a strong endorsement value to the business, given his long-term track record as CEO of Aetna, which he sold to CVS for a great outcome for Aetna shareholders. Bertolini’s compensation package aligns his interests with shareholders, and he only really starts getting paid when the stock trades at $11 (vs the still discounted ~$9 level where the stock ended the year). In his first year, he has in quick order improved cost control and operational efficiency that drove EBITDA strength. Oscar reported another great quarter in November, beating expectations across most metrics and increasing 2024 guidance. The original venture investor holders beyond Thrive remain an overhang on the share price, and Oscar still offers significant upside from here.”

Overall OSCR ranks 10th on our list of the hot stocks to buy. While we acknowledge the potential of OSCR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OSCR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.