UnitedHealth Group (UNH)

UniteHealth primarily provides health insurance in the United States.  This company has grown very rapidly in the last five years. Revenues have almost doubled from $ 23,454 in 2001 to $45,365 in 2005. At the same time, earning per share has almost quadrupled from $.70c to $2.48.
 
However, because of its size, growth is slowing down considerably. This year UNH is supposed to earn around $3/share or almost $4 billion dollars. Conservatively, earnings growth should be in the 10-15% range over the next 5 years. Plus, since it's an insurance company, it generates tons of free cash flow that will be used to buy back shares.
 
At 15 times earnings ($47), this company seems pretty cheap. The big hang over right now is an options scandal. The company stated that its sec filings should not be relied upon and that it will take "significantly greater" charge than prior estimates of up to $286 million. Once these charges are finally cleared up and the ridiculous amount of options granting is cleaned up, the stock should rise. The other possible hang over is medicare reform by the newly elected democratic party.

At this point, the stock looks cheap enough for me to buy. Because the growth rate  will be more tepid over the next 5 years, I’m using the same spread options strategy as I used when buying Home Depot. I bought a Jan 2009 $45 call and sold a Jan 2009 $50 call for a net price of $2.50 on Monday. If UNH stays above $50 on Jan 2009, my profit will be 100%.