Zacks Investment Ideas feature highlights: UnitedHealth, Progressive and HCI

For Immediate Release

Chicago, IL – May 19, 2025– Today, Zacks Investment Ideas feature highlights UnitedHealth Group UNH, The Progressive PGR and HCI Group HCI

After 30% Slide, Is UNH a Buy? Use the 3-Day Rule to Decide

UnitedHealth Group shares have come under significant pressure, collapsing by over 30% in just a few days and now sitting more than 60% below all-time highs. The selloff followed news that the company is under criminal investigation for possible Medicare fraud.

While panic selling often creates opportunity, investors need to tread carefully. One of the most helpful tools in this situation is the "three-day rule," a simple but powerful guideline that can help avoid catching falling knives and improve your timing when buying stocks under pressure.

Below, I'll walk through how the rule works, assess whether UnitedHealth shares are cheap, and explore whether now is the time to buy. I'll also highlight two alternative insurance stocks with stronger price momentum and better Zacks Ranks: The Progressive and HCI Group.

What Is the 3-Day Rule for Buying Stocks?

The "three-day rule" is a common guideline used by traders and investors alike. It suggests waiting at least three full trading days after a major negative event or sharp drop before considering buying the stock.

Why wait? Because heavy institutional selling, downgrades, and margin call-driven pressure often unfold over several days, not all at once. By the third day, some of that pressure may have been absorbed, and a clearer picture of support and sentiment begins to form.

UnitedHealth's stock fell sharply on legal risk and headline uncertainty. By waiting for at least a short period of stabilization, long-term investors can get a better entry and avoid stepping into more near-term pain.

Are UnitedHealth Group Shares Cheap?

From a valuation standpoint, UnitedHealth now trades at just 10.5x forward earnings, a steep discount from its 10-year median of 19.1x. Additionally, analysts forecast 12.2% annual EPS growth over the next three to five years, putting its PEG ratio under 1, a level that typically signals undervaluation based on growth.

While uncertainty remains around legal outcomes, the valuation has become undeniably attractive for long-term investors willing to weather near-term noise.

Should Investors Buy Shares in UNH?

If you're a long-term investor with a multi-year horizon, the current drop may offer an opportunity. The stock has hit the three-day mark, valuation is compelling, and UnitedHealth still operates one of the largest and most diversified healthcare insurance businesses in the country.

However, the Zacks Rank offers another perspective. UNH currently has a Zacks Rank #5 (Strong Sell), reflecting downward earnings estimate revisions and continued caution among analysts. That suggests caution is still warranted.

Traders or short-term operators may want to wait for further stabilization, or a Zacks Rank upgrade before jumping in.

Other Insurance Stocks to Buy: The Progressive and HCI Group

While health insurance can be tricky because of the onerous regulatory health insurance framework in the country's and complex system, other corners of the insurance market are performing much better.

The Progressive has been one of the most consistent names in the insurance space, benefiting from strong underwriting, pricing power, and customer acquisition across its auto and property insurance businesses.

PGR has remained near the top of the Zacks Rank system for two years, with steady earnings growth and price momentum. It currently holds a Zacks Rank #2 (Buy) and is currently on the verge of a major technical breakout, having consolidated near recent highs, pictured below.

HCI Group is a smaller but rapidly growing insurer focused on homeowners' insurance, primarily in catastrophe-prone states like Florida. It blends traditional underwriting with technology and reinsurance expertise to manage risk efficiently.

HCI also has a Zacks Rank #2 (Buy) and continues to print new highs, demonstrating powerful price momentum.

How to Trade Falling Stocks

While it's tempting to jump into names like UnitedHealth Group after a massive drop, trying to catch falling knives can be a risky game. Even with the three-day rule in mind, I prefer to focus on stocks with positive momentum and rising earnings estimates—names that are seeing buying pressure, not selling.

In today's market, stocks like The Progressive and HCI Group offer that upside potential, without the headline risk that currently weighs on UnitedHealth.

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