Two stocks that have been at the center of financial news stories throughout the year are data mining specialist Palantir Technologies (NASDAQ: PLTR) and health insurance giant UnitedHealth Group (NYSE: UNH).

The reasons these two companies are fetching so much attention, however, couldn't be more opposite.

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Palantir has emerged as a darling of the artificial intelligence (AI) revolution. As of this writing (June 5), shares of the stock have gained nearly 60% on the year -- making it one of the top performers in the S&P 500 and Nasdaq-100 indexes.

By contrast, UnitedHealth Group stock is the worst-performing name in the Dow Jones Industrial Average -- with shares plummeting by more than 40%.

Is now the time to hop on the Palantir train, or should investors take an inventory check on UnitedHealth and choose to buy the dip?

Palantir is on a run for the ages

It's been just over two years since Palantir released its Artificial Intelligence Platform (AIP), a software suite that's proven to be a transformative game changer in the company's pursuit of competing with the largest players in the tech landscape.

PLTR Revenue (Quarterly) data by YCharts

Since releasing AIP, Palantir has unlocked a new wave of revenue acceleration -- thanks in large part to the company's impressive penetration of the private sector. For most of its history, Palantir relied heavily on government contracts from the Department of Defense (DOD).

While deals with the U.S. Military and its allies are still an important cornerstone of Palantir's business, AIP has helped the company break ground in a host of other use cases -- financial fraud, supply chain and logistics, aviation, and much more.

What might be most impressive about Palantir's transformation over the last two years is how rapidly the company transitioned from a cash-burning operation to one that generates consistent profitability. Not only is Palantir acquiring new business, but it's also monetizing these customers in a profitable way. That's a lucrative combination, indeed.

The one idea that's paramount for smart investors to understand is that while Palantir's business is soaring, so is the company's share price. As of this writing, Palantir trades at a price-to-sales (P/S) ratio of 97.

Not only is that magnitudes higher than any of its peers in the software realm, but it is historically high compared to what investors witnessed during the dot-com bubble in the late 1990s.

I don't think I'm the only one who has noticed the pronounced valuation expansion in Palantir, either. Consider that Cathie Wood's Ark Invest portfolio has been trimming Palantir stock as of late, and billionaire money manager Stanley Druckenmiller completely dumped his firm's stake in the AI stock during the first quarter.

UnitedHealth Group can't seem to get out of its own way

UnitedHealth Group's coverage couldn't be any more different than Palantir's. While investors continue to cheer on Palantir's dominance, it seems that only negativity surrounds UnitedHealth at the moment.

At the core of the health insurer's problems are some operational hiccups. Mismanagement in forecasting utilization rates in the company's Medicare Advantage business, as well as some unforeseen challenges in the pharmacy benefits management (PBM) segment, caused management to reduce financial guidance for 2025.

If this weren't enough to get investors worked up, UnitedHealth also replaced its CEO as the company seeks to right the ship and turn things around by next year.

UnitedHealth's downward revision and executive changes were met with a stock sell-off for the ages. Don't believe me? As of this writing, shares of UnitedHealth trade at $296 -- hovering near a five-year low.

Image source: Getty Images.

Which stock is the better buy?

Despite its near-term headwinds, UnitedHealth stock looks awfully tempting at a forward price-to-earnings (P/E) multiple of just 13. When you consider that insiders have been buying the stock in the aftermath of this epic sell-off, I'm cautiously optimistic that all of the bad news surrounding UnitedHealth is priced in.

UNH PE Ratio (Forward) data by YCharts

On the other side of the equation, I think it's becoming increasingly difficult to argue that max upside isn't already priced into Palantir. Sure, I'm bullish on the company's future, but buying the stock near an all-time high doesn't seem like a prudent idea right now.

Overall, I'd choose to buy the dip in UnitedHealth as opposed to chasing the momentum fueling Palantir stock at the moment.

Should you invest $1,000 in Palantir Technologies right now?

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Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

With shares down by more than 40%, UnitedHealth Group (NYSE: UNH) is the poorest-performing stock in the Dow Jones Industrial Average so far this year.

Over the last month or so, there has been no shortage of storylines surrounding America's largest health insurers. And if the share price movements are any indication, most of the news isn't great.

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Let's dig into what has driven UnitedHealth stock off a cliff, and explore whether or not it remains a good buy for long-term investors.

What is going on at UnitedHealth?

A significant influence on a stock price, at least over the short term, is how a company's quarterly earnings are perceived. Generally speaking, if a company beats Wall Street estimates or raises its outlook, shares rise. On the other hand, if investors aren't impressed by the company's performance, they may choose to sell the stock.

During UnitedHealth's fourth-quarter and full-year 2024 earnings call in January, management issued earnings guidance of $28.15 to $28.65 per share.

Things took an unexpected turn when it reported first-quarter earnings on April 17. Management is now guiding in the range of $24.65 to $25.15 for earnings per share (EPS).

Two primary factors contributed to the downward revision. First, utilization rates from the company's Medicare Advantage businesses were higher than management was forecasting. These dynamics increase near-term costs, thereby stifling profitability.

Second, the company's Optum Health division -- which serves as a pharmacy benefits manager -- has been struggling on reimbursement due to a combination of cuts to Medicare as well as changes in insurance plans in certain market demographics.

Unfortunately for investors, UnitedHealth's drama didn't stop at the operational hiccups detailed above. About a month after the first-quarter earnings report, the company announced that CEO Andrew Witty had resigned.

If this weren't enough to get investors hitting the panic button, The Wall Street Journal followed up that news with a report that UnitedHealth was under investigation from the Department of Justice (DOJ) regarding fraudulent activity in Medicare billing.

Management was quick to deny these claims and called the report "deeply irresponsible."

Image Source: Getty Images.

UnitedHealth's valuation is getting clobbered

As of this writing (June 3), shares are trading around $300, near a five-year low.

UNH PE Ratio (Forward) data by YCharts.

The graph above shows that UnitedHealth is valued right in between insurance giants Humana and Cigna on a forward price-to-earnings (P/E) basis.

Is the stock a buy right now?

Just a month ago, the company's forward P/E was roughly twice as high as now and trading for a premium compared to the competition. Given the extreme valuation compression over the last several weeks, I am inclined to think much (if not all) of the bad news is priced into the stock already.

A downward revision in guidance and changes in management are the main talking points surrounding UnitedHealth at the moment. But in the company's first-quarter earnings release and the the announcement of Witty's resignation, management added that the company should return to growth by next year.

The company's new CEO, Stephen Hemsley, purchased $25 million in UnitedHealth stock following the sell-off last month. This was met with another $6.6 million of insider buys from other executives. I think this signals confidence in the company's long-term prospects. In my view, these insider buys suggest management believes that UnitedHealth is poised to return to growth.

While the near-term price action might continue exhibiting some volatility, I think the shares remain a solid opportunity for long-term investors. Given the valuation trends explored in this article, I think now is an opportunity to buy the dip in UnitedHealth Group stock at a bargain valuation.

Should you invest $1,000 in UnitedHealth Group right now?

Before you buy stock in UnitedHealth Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and UnitedHealth Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

A healthcare giant. One of only 30 stocks in the Dow Jones Industrial Average. A longtime investors' favorite. UnitedHealth Group (NYSE: UNH) is all those things. However, it's also now a big loser.

Shares of UnitedHealth Group have plunged more than 50% below the peak achieved late last year. Problems have hit the world's largest health insurer wave after wave. In March, every analyst surveyed by LSEG rated UnitedHealth Group as a "buy" or "strong buy." Today, some recommend selling. But is UnitedHealth Group stock instead a brilliant bad news buy?

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Image source: Getty Images.

One thing after another

UnitedHealth Group's challenges began last year. The company experienced a cyberattack in February 2024 that ultimately cost more than $2 billion. It disappointed investors with the outlook provided in the third-quarter update in October. In December, Brian Thompson, CEO of UnitedHealthcare, was shot and killed in New York City. The crime was allegedly due to the accused killer's anger at health insurers.

More bad news came in 2025. UnitedHealth Group reported lower-than-expected first-quarter earnings in April. The company lowered its full-year earnings guidance, citing higher Medicare Advantage costs and "unanticipated changes" in Optum's Medicare membership.

However, the situation soon went from bad to worse. In May, UnitedHealth Group suspended its 2025 outlook. The company said that "care activity continued to accelerate" and that the medical costs of new Medicare Advantage members were higher than expected. At the same time, UnitedHealth announced the abrupt departure of CEO Andrew Witty "for personal reasons."

And that wasn't all. The Wall Street Journal reported that the U.S. Department of Justice (DOJ) had launched a criminal investigation into UnitedHealth Group for potential Medicare fraud. President Donald Trump also said during a press conference that he intends to "cut out the middleman" with prescription drugs, a reference to pharmacy benefits managers (PBMs). UnitedHealth Group's OptumRx ranks as the second-largest PBM.

Temporary issues?

With all this bad news, it's no surprise that UnitedHealth Group's share price has sunk like a brick. However, several of the company's issues could be only temporary.

For example, UnitedHealth Group appears to have moved past the difficulties caused by the cyberattack last year. Insurers have a simple mechanism for addressing higher medical costs: They raise premiums. The higher costs might weigh on earnings over the short term, but profits should rebound relatively quickly. It's a similar story with membership changes that negatively affect financial results in the short term.

UnitedHealth Group stated in a press release that it "expects to return to growth in 2026." I think that's a realistic view.

What about the DOJ investigation? UnitedHealth Group pushed back against The Wall Street Journal article, stating, "We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution." The DOJ hasn't publicly commented on any investigation of UnitedHealth Group.

The company's CEO turnover isn't troubling to me. UnitedHealth Group immediately replaced Witty with Stephen Hemsley, who served as CEO from 2006 through 2017 and remains its chairman of the board of directors. Hemsley knows the business inside and out. I suspect he'll provide the steady leadership UnitedHealth Group needs.

A brilliant bad news buy?

You might have noticed that I didn't include President Trump's desire to "cut out the middleman" in the discussion of UnitedHealth Group's temporary issues. In my opinion, the threat to PBMs is the company's biggest problem. And it's not a temporary one.

That said, I wouldn't bet on PBMs disappearing anytime soon. I also think a strong argument can be made that UnitedHealth Group's problems are fully baked into its share price, with the stock trading at its lowest price-to-earnings multiple in more than a decade.

Is UnitedHealth Group out of the woods yet? No. However, this beleaguered healthcare stock could be a brilliant bad news buy for patient investors.

Should you invest $1,000 in UnitedHealth Group right now?

Before you buy stock in UnitedHealth Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and UnitedHealth Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

From TV star to powerful government official. That's the path taken by President Donald Trump and his new administrator of the Centers for Medicare and Medicaid Services (CMS) -- Dr. Mehmet Oz.

Oz was a heart surgeon and medical school professor for years. He achieved fame thanks to frequent appearances on The Oprah Winfrey Show, which led to his hosting his own TV program, The Dr. Oz Show. Oz ran unsuccessfully for a U.S. Senate seat in Pennsylvania in 2022.

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But that didn't end his political career. The Senate officially confirmed Oz to head CMS on April 3. Here's what retirees need to know so far.

Image source: Getty Images.

1. Oz's confirmation went along party lines

All 53 Republican senators voted to confirm Oz to head CMS. None of the 45 Democratic senators voted for his confirmation. What were the minority party's objections to having Oz run CMS?

For one thing, some Democrats were concerned about Oz's potential conflicts of interest. He has disclosed investments in big drugmakers AbbVie and Eli Lilly and giant health insurer UnitedHealth Group, among others. These healthcare companies receive payments from Medicare. Oz did commit to divesting any financial interests in these companies.

There were also questions raised during Oz's Senate confirmation hearing about his past support for controversial therapies. For example, ranking Democratic member of the Senate Finance Committee, Sen. Ron Wyden of Oregon, asked Oz about his advocacy of green coffee extract, which the senator said was fraudently marketed as a "miracle weight-loss drug."

Probably the biggest objection to Oz's confirmation, though, was that he wouldn't commit to fighting attempts to cut Medicaid.

2. Oz has previously promoted Medicare Advantage

Oz has been a longtime proponent of Medicare Advantage plans. He and former Kaiser Permanente CEO George Halvorson proposed expanding Medicare Advantage because they believed it's better than traditional Medicare.

It remains to be seen how aggressively Oz will promote Medicare Advantage now that he's running CMS. During his Senate confirmation hearing, he promised to "go after" a fraudulent practice that can be problematic for Medicare Advantage called upcoding, by which healthcare providers file claims for more expensive procedures or diagnoses than the actual procedure or diagnosis to receive a higher reimbursement from Medicare.

3. What Oz says his Medicare priorities are

Oz acknowledged several problems for Medicare during his confirmation hearing, including the fact that healthcare costs are growing faster than the economy and that the Medicare Trust Fund will run out of money within the next decade. He told the told the Senate Finance Committee that he had three top priorities as the administrator of CMS.

First, Oz wants to "empower beneficiaries with better tools and more transparency, so the American people can better navigate their health, as well as dealing with the complex healthcare system we have created for them." He specifically mentioned increasing transparency related to prescription drug costs.

Second, he wants to provide incentives to healthcare providers to "optimize care." Oz thinks that using artificial intelligence (AI) can "liberate doctors and nurses from all the paperwork" and allow them to focus more on patients.

Third, Oz plans to aggressively reduce waste, fraud, and abuse with Medicare and Medicaid. The previously mentioned upcoding issue was one area that he discussed targeting.

4. There has been one Medicare surprise so far

Oz has been at the helm of CMS for less than a week. There has already been one Medicare surprise. On April 8, 2025, CMS announced a higher-than-expected payment increase for Medicare Advantage plans. It's unclear if Oz was involved in the decision, but the move could indicate that he'll continue his previous support for Medicare Advantage plans as head of CMS.

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Keith Speights has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.