It's possible. Corporate finance is part of my background, and I definitely can't do the technical stuff most people in this thread do, yourself included.
What I mean is if you value UNH solely based on its cashflows and you thought a consistent growth rate was actually pretty close to the truth for a monolithic insurance company, you would have your eye out for a situation like this.
Absurdly simplified example using FCFE since we can value equity directly. I'm choosing a performance level that makes the math illustrative, not any actual belief:
So if we want to compete with S&P on returns (with a lot more risk), we'd look at a $480ish share price. Right now we're at $440, which would imply the stock is 'cheap'. Who knows why--
Sanrith Descartes
presumably has a hypothesis that it's an overcorrection of the sector applying to the stock. So you pick some up.
UNH previously grew cashflow 15% YoYoY. Maybe in the earnings call they only come out 5% up, and the stock tanks further. But that still fits your hypothesis, so you pick even more up at a greater discount.
That's all I'm saying. If your hypothesis is that other people are valuing UNH highly because they expected them to start mining lithium or getting into nuclear power or receive some oligopolistic regulatory requirements, I think it makes sense to be looking for prices that seem to discount a target level of actual operating performance.
Reading the post you linked, I think the reason I wouldn't A. not buy immediately and B. exit and try again is that I'd be afraid the market would realize its mistake and correct up, and I'd miss my chance. Everything's easy to see with hindsight, and knowing you could have done better is probably a good lesson, but pulling out and regrouping only to find the opportunity closed the next day when you're talking about 20 years feels shortsighted in the other direction.
All that being said, I'm the guy who buys SPY for 20 years, so full disclosure that my practical experience here is nil.
