UnitedHealthcare vs. Aetna - Which Would You Rather Invest In?

The massive size and scope of the Affordable Care Act has the potential to shake up the insurance industry. Today we will take a look at how two giant healthcare providers, UnitedHealthcare, under the parent UnitedHealth Group UNH and Aetna AET, fared during 2013 - the year when Obamacare was officially taken to the masses.

Both saw their stocks soar.

UnitedHealthcare began 2013 trading at $55 per share, and rose steadily into late summer. By September 16, the stock was trading at almost $76 per share – a 38 percent increase. But after this mid-September high UnitedHealthcare pulled back some, and continued to trade in the general $66 to $75 dollar range for the rest of the year.

On the bright side, the stock did finish the year close to its yearly high at $75.30. But as the stock entered 2014 it slid slightly, trading for $73.50 going into late February.

Related: Capital One or U.S. Bank: Which Would You Rather?

Aetna opened 2013 trading at $43.05. The stock trended upwards throughout the spring and summer, and peaked in mid-September at a price of $69.19 before its upward momentum stalled. Aetna would only flirt with breaking through the $70 mark once more in the year, in late-November, but was never able to push through the psychological barrier.

Aetna finished the year at $68.59 – a whopping 59 percent increase on the year.

While the long-term success of the Affordable Care Act may not be in serious doubt, who the ultimate winners and losers of the law will be is still an open question. Judging from the fact that both UnitedHealthcare and Aetna had returns that beat the market averages in 2013, despite the problems experienced in the Obamacare roll out, it is clear that investors are betting that the established mega-insurers will be among the winners. But this conclusion is anything but certain.

New laws often have the effect of opening new opportunities in existing industries, which may be exploited by competitors. For now, it appears that the established companies are safe, and continue to be good investments.