In today’s investment landscape, finding value amidst a market nearing historical highs can be daunting. The Shiller price-to-earnings ratio, also known as the CAPE ratio, suggests that many stocks are trading at elevated prices. However, despite this pricey terrain, a few compelling investment opportunities present themselves. If you’re contemplating a $5,000 investment and are searching for dirt-cheap stocks, UnitedHealth Group (NYSE: UNH) and Alphabet (NASDAQ: GOOGL) are two options that may be worth considering. Here’s a deeper look at both, their current challenges, and why they might be suitable for investors seeking value.
### UnitedHealth Group (UNH)
UnitedHealth Group has faced its fair share of turbulence in 2025, with its stock down nearly 32% year-to-date. The company is grappling with several challenges that have affected its reputation and stock price. Notably, federal investigations by the Department of Justice (DOJ) into alleged upcoding practices have introduced significant legal pressure. These probes are examining whether the company categorized patients into higher-cost tiers to inflate reimbursements, prompting concerns regarding its pharmacy benefit management.
Adding to this, UnitedHealth’s pricing strategy for 2025 was off the mark. The company underestimated the acceleration of medical costs—particularly in its Medicare Advantage segment—leading to a disappointing earnings report where adjusted earnings per share (EPS) fell well below expectations at $4.08. Consequently, the company revised its full-year earnings guidance from $26.25 to just $16 per share. Analysts have since lowered their price targets for the stock, marking 2025 as a reset year for UnitedHealth.
Despite these headwinds, UnitedHealth retains a significant share of the U.S. health insurance market. Its stock is currently trading at around 19.4 times next year’s forecast earnings. For investors, this represents an opportunity to buy almost 14 shares for a $5,000 investment; a relatively inexpensive entry point considering the company’s historical valuation.
### Alphabet (GOOGL)
In contrast, Alphabet, the parent company of Google, remains a powerhouse in the technology sector, despite facing its own competitive pressures. With a forward P/E ratio in the mid-20s, it presents an attractive buying opportunity compared to the S&P 500 average, currently at 30.2.
Alphabet’s search business is a reliable revenue generator, processing over 5 trillion queries annually. It boasts more than 2 billion users across platforms like Android, YouTube, and Gmail, generating impressive revenues—$104.9 billion in the first half of this year alone, with an 11% growth rate.
There have been concerns regarding the competitive landscape with the emergence of advanced AI technologies. However, Alphabet is adapting to these changes, launching AI Overviews powered by its Gemini model, which has led to a 10% increase in relevant searches. Furthermore, Alphabet’s ventures into autonomous driving through Waymo and its rapidly expanding Google Cloud platform highlight its potential for long-term growth.
Waymo, once viewed as a “moonshot,” is now a leader in fully autonomous technology, accommodating over a quarter of a million paid passenger trips weekly—a fivefold increase from last year. Meanwhile, Google Cloud services have seen considerable demand, with new customer acquisitions doubling year-over-year. With over $95 billion in cash reserves, Alphabet is well-positioned for future investments and capital returns.
### Investment Considerations
Before diving in, it’s essential to consider the broader implications of investing in UnitedHealth Group and Alphabet. While these stocks present promising opportunities, they are not without risks.
For UnitedHealth, the ongoing federal investigations and challenges in accurately predicting healthcare costs could hinder its recovery. However, with a strong market position and potential for premium adjustments in future years, it may bounce back as a value investment.
On the other hand, while Alphabet’s technology prowess ensures its leading position, the company must navigate the fast-paced landscape of innovation and competition to maintain its edge. Its willingness and ability to invest in AI and cloud services could enhance its growth trajectory.
### Final Thoughts
In a market filled with high valuations, identifying stocks with reasonable prices is crucial for emerging investors. UnitedHealth Group and Alphabet stand out as two dirt-cheap stocks worthy of consideration for a $5,000 investment. Each presents distinct challenges, but with strategic foresight, they could provide growth opportunities in an otherwise expensive market.
Investing carries inherent risks, and it’s recommended to conduct further research or consult with a financial advisor before making any investment decisions. Whether you choose to invest in these companies or look for alternatives, the key is understanding their current market positions, future growth potential, and inherent risks.
Remember, while UnitedHealth and Alphabet are compelling options, diversification remains a fundamental principle of investing. By spreading your investments across several sectors and asset classes, you’ll be better positioned to weather market fluctuations and capitalize on growth opportunities in the long run.
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