2 Undervalued Stocks Down 40% and 45% to Buy For 2026

The piece promotes a short video highlighting two undervalued companies that experienced pullbacks in 2025 and are expected to show fundamental improvement in 2026; referenced stock prices are from the trading day of Dec. 19, 2025 and the video was published Dec. 21, 2025. It specifically mentions Oscar Health (the author discloses a personal position) and notes that The Motley Fool’s Stock Advisor did not include Oscar Health in its current top-10 recommendations while touting Stock Advisor’s historical returns; no company revenues, earnings or concrete valuation metrics are provided. Disclosures state the author is an affiliate and may earn compensation from subscriptions, and The Motley Fool recommends UnitedHealth Group.

Analysis

Market structure: The cheapest, highest-upside beneficiaries are scale incumbents (UNH) and AI/streaming winners (NVDA, NFLX) because investors are rotating to durable cash-flow and AI exposure while sidestepping small, capital-hungry insurers like OSCR. Expect share reallocation: medium-term pricing power shifts to incumbents able to absorb reimbursement pressure and undercut niche players; small-cap healthcare will face higher funding costs and tighter M&A windows. Cross-asset: elevated equity implied volatility in OSCR and small-cap healthcare, modest downward pressure on corporate credit spreads for high-quality insurers, and continued positive correlation between semiconductors (NVDA) and risk-on FX/commodities flows.

Risk assessment: Key tail risks are regulatory (CMS/Medicare Advantage reimbursement changes) and enrollment shocks for OSCR, plus AI-capex cyclicality for NVDA; low-probability/ high-impact outcomes include a CMS policy change within 6–12 months or a major NVDA earnings miss. Time horizons: expect headline volatility in days around earnings/ CMS notices, material fundamental moves in 3–12 months (2026 improvement thesis), and structural winners/losers evident over 12–36 months. Hidden dependencies include state-level Medicaid dynamics, reinsurance capacity, and access to capital for OSCR; catalysts are Q4/2025–Q1/2026 earnings, CMS guidance, and membership data releases.

Trade implications: Tactical alpha comes from concentrated, asymmetric option positions and relative-value pairs rather than broad long-only exposure. Favor 2–4% portfolio long positions in NVDA/NFLX for growth + sell OTM call premium to improve yield; keep OSCR as a 0.5–1% speculative position via long-dated call spreads (12–18 months) to cap downside. Rotate portfolio overweight to large-cap healthcare (UNH 3–5% overweight) and underweight small-cap healthcare; use pair trades (long UNH / short OSCR) sized dollar-neutral to capture share-shift risk.

Contrarian angles: Consensus underestimates two scenarios: (1) OSCR can materially cut loss rates via state-level provider deals and be re-rated in 9–18 months; (2) NVDA/NFLX upside is more front-loaded and already priced, making covered-call income strategies attractive. The market may be overpricing OSCR’s terminal risk — if OSCR stabilizes membership growth by Q3 2026, a 30–50% retracement is plausible. Unintended consequence: aggressive regulatory scrutiny aimed at small insurers could tighten margins industry-wide, compressing valuations even for UNH if enacted broadly.

Key Decisions for Investors

• Establish a 2–4% portfolio long position in NVDA (or equivalent AI semiconductor exposure) and sell 1–2% notional of 3-month, 25–35% OTM covered calls to monetize near-term premium; trim if NVDA outperforms by >25% in 3 months.
• Initiate a 3–5% overweight in UNH as defensive healthcare exposure to capture market-share gains; set a stop-loss at -12% and take-profit reduction if UNH outperforms peers by >20% over 6 months.
• Create a speculative 0.5–1% position in OSCR via a 12–18 month call spread (buy 30–40 delta call, sell 60–70 delta call) to cap downside; add another tranche only if OSCR membership growth turns positive or stock drops an additional 20% from current levels.