| If you want to trounce the market, the way to do it is by paying a reasonable price for a company that's capable of consistently growing its earnings for a long period of time. The Cigna Group (NYSE: CI), an insurance and managed healthcare company, is a perfect example. Take a long look at its beautiful historical earnings chart... Over the past two-plus decades, Cigna's earnings per share (EPS) have increased by a stellar 609%. But if I were to extend the chart all the way back to 1984, it would look even better. That chart would show you that Cigna's EPS has increased by a ridiculous 161,600%! This is what we want to see as investors, folks: growth, growth and more growth on a per-share basis. It is EPS growth that drives up a stock's price over time. As you would expect, Cigna's EPS growth has done tremendous things for long-term shareholders. The stock has soundly beaten the S&P 500 in the short term, the long term and everywhere in between. A $10,000 investment in Cigna in 2000 would have grown to $113,470 today. Meanwhile, the same investment in the S&P 500 would have become just $28,820. Clearly, Cigna has been an excellent stock to buy and hold for the long term. But with the amount of volatility we've seen in the markets over the past couple of years, we can't assume that's still the case. To determine Cigna's valuation, let's take a look at the company's future prospects... including how I expect next week's earnings report to turn out. |
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