Could NIB Health shares be worth a look at current prices?
The post NIB Holdings (ASX:NHF) share price looks attractive long term – Expert appeared first on The Motley Fool Australia. –
It has been a cracking past year for the NIB Holdings Limited (ASX: NHF) share price, climbing nearly 60%. Yet, one fund manager still considers the health insurer an attractive proposition.
At the time of writing, the company’s shares are down 0.7% to $7.13. Furthermore, the NIB share price is ~2% off its recently reset 52-week high of $7.30.
Could the NIB share price run higher?
Earlier this morning, I covered a few key takeaways from the Prime Value Opportunities Fund June update. In contrast, the team also operates an ‘Emerging Opportunities’ fund which focuses on ASX-listed companies outside the ASX 100.
Impressively, the Emerging Opportunities fund delivered a 42% return after fees in FY21. This represents an 8.8% outperformance of the S&P/ASX Small Ordinaries Index (ASX: XSO).
The fund openly dismissed speculation of a near-term market downturn. Rather, Prime Value reiterated its high-conviction stock-picking approach – noting that short-term weakness would present opportunities.
Speaking of opportunities, the fund highlighted the NIB share price as ‘very attractive’ on a two-to-three-year time horizon.
In its update, the Melbourne-based Australian investment manager said:
The consensus view is that profit margins are unsustainably high and it’s better to own the health providers as elective surgeries, etc. return. We agree NHF’s margins will fall but using long term, sustainable margins, the company is very attractively priced. And in the meantime it generates very high cashflows, boosting the balance sheet. To us, fundamental underlying value is more important than short term earnings trends.
Based on the current NIB share price, the company trades on a price-to-earnings (P/E) ratio of 32.9. For dividend investors, NIB health offers a 1.96% dividend yield.
Funds’ top holdings
Portfolio Manager Richard Ivers has put a heavy emphasis on financials, consumer discretionary, and industrials for the Emerging Opportunities fund.
Should you invest $1,000 in NIB Holdings right now?
Before you consider NIB Holdings, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and NIB Holdings wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited and Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.