Finding Value in (Some) Losers

THE stock market has surged since early April to a solid gain for 2025, so it may come as a surprise to learn that since the start of the year, more than one-third of the components of the S&P 500 index have declined—79 of them by at least 10%.

- JAMES K. GLASSMAN

Some of the biggest losers are attractive. I still have worries about the effects of the new tariff regime on the global economy and the U.S. market, but if you are looking for long-term purchases—as you should—this is the time to examine stocks that the market shuns. My intention is to show how to separate good buys from value traps (that is, stocks that deserve to be cheap).

Let’s begin with UnitedHealth Group (symbol UNH, $250). It’s down 49.8% so far this year (through July 31, the date for prices, returns and other data here, unless otherwise noted). Its woes are many, including the assassination of Brian Thompson, CEO of its UnitedHealthcare unit, which elicited a shocking wave of support for the alleged killer. Polls found that most Americans blame United’s thirst for profits, at least in part, for Thompson’s death. More recently, the company announced it was facing a Justice Department criminal and civil investigation for its billing practices.

Many Americans may think United is making too much, but Wall Street thinks it’s making too little. The company’s Medicare Advantage business has been a disaster because elderly members are going to the doctor more than expected. Costs are rising in other parts of the health insurer's business as well. In July, United cut its earnings projection for 2025 by half from the January forecast.

Investors are wise to ask: Is the reason for United’s problems endemic to the business or the result of mistakes that can be corrected and challenges that can be overcome? The firms that insure their members against health costs are widely despised, and it’s possible that Congress and the White House will seek remedies that will further harm the sector. But politics is part of running any large business in the U.S. today, and United has navigated these shoals before.