To The Moon

$S&P 500(.SPX)$ The market is ripe with opportunity as Warren Buffett’s “cigar butt” strategy—snagging severely oversold large-cap stocks—gains traction, especially after his stunning $1.6 billion move into UnitedHealth Group (UNH) yesterday, August 15, 2025. UNH, which soared 10% to $268 in after-hours trading following the Q2 13F filing, still trades 15% below Buffett’s $314 average purchase price, hinting at lingering value. Meanwhile, Lululemon (LULU) has plummeted 50% year-to-date to $198, Novo Nordisk (NVO) has shed 40% to $50.20, and Eli Lilly (LLY) dropped 15% to $831 before its latest earnings beat. With the S&P 500 at 6,466.58, Nasdaq at 21,713.14, and Bitcoin at $124,002, the bullish tide persists, though tariffs (30% on EU/Mexico, 35% on Canada) and oil at $75/barrel add caution. Are these crashed stocks worth a bet, or are they too battered to bounce back? This deep dive explores the dip-buying potential, market sentiment, and strategies to turn these fallen giants into your next win.

The Crash Landscape: Why These Stocks Stumbled

Each stock’s downturn tells a unique story:

• UnitedHealth ( $UnitedHealth(UNH)$ ): Down 62% from its $585.04 high in April 2025 to $250.74 yesterday, Buffett’s 5.039 million-share purchase at $314 reflects a contrarian bet. A cyberattack, Medicare billing probes, and $5 billion in extra costs hit hard, but a 3.58% dividend yield and $410 billion revenue offer a safety net.

• Lululemon ( $Lululemon Athletica(LULU)$ ): Halved from $396 to $198 this year, a 20% Q2 revenue miss to $2.3 billion and weaker athleisure demand amid economic slowdowns sparked the sell-off. Its 15x P/E ratio, down from 40x, suggests undervaluation if trends reverse.

• Novo Nordisk ( $Novo-Nordisk A/S(NVO)$ ): Slid 40% from $83.70 to $50.20, losing ground to Eli Lilly’s weight-loss drug dominance (Mounjaro vs. Ozempic). Q2 sales grew 23% to $9.8 billion, but a 15% profit drop to $2.6 billion raised concerns about pricing pressure.

• Eli Lilly ( $Eli Lilly(LLY)$ ): Fell 15% from $978 to $831 pre-earnings, despite a 29% revenue rise to $11.3 billion and a 70% profit jump to $3.1 billion, driven by Mounjaro and Zepbound. Analyst downgrades over valuation (40x forward P/E) triggered the dip.

• Market Sentiment: Posts found on X highlight UNH as “Buffett’s bargain,” LULU as “oversold athleisure,” and NVO/LLY as “pharma roulette,” with dip-buying chatter growing amid a 4.05-to-1 advancer-decliner ratio on NYSE.

These crashes reflect sector-specific woes, but oversold signals and Buffett’s move suggest a potential turnaround.

Market Context: Oversold or Overdone?

The broader environment shapes the recovery odds:

• Index Stability: The S&P 500’s 6,466.58 and Nasdaq’s 21,713.14 hold firm, with a VIX at 14.49 indicating low volatility, though a 5-10% dip to 6,150-6,200 looms if tariffs escalate.

• Healthcare Pivot: Buffett’s UNH stake aligns with a sector rotation, as peers CVS Health ($58.20, +2.5%) and Humana ($345.60, +1.8%) rallied, per recent posts found on X.

• Consumer Trends: LULU’s athleisure slump mirrors a 0.5% U.S. retail drop in July, but a 25% rebound in luxury stocks like LVMH ($466) signals selective recovery potential.

• Pharma Rivalry: NVO and LLY’s dip reflects a $100 billion market cap loss in weight-loss drugs, but global diabetes demand (10% growth) offers a long-term floor.

Oversold conditions (RSI below 40 for all) and Buffett’s contrarian lens suggest value, but risks remain if macroeconomic headwinds persist.

Worth a Bet? Dip-Buying Opportunities

Are these stocks ready to rise?

• UNH Bull Case: At $268, 15% below Buffett’s $314, it trades at 13x earnings with a $22 billion profit base. A $300-$320 target (12-19% upside) is in play if Medicare stabilizes, outpacing its 46% YTD loss.

• UNH Bear Case: A 10-15% drop to $225-$240 risks if probes deepen or costs surge, given a 2.60 debt-to-equity ratio.

• LULU Bull Case: At $198, down 50%, a 15x P/E and $6.5 billion revenue support a $230-$250 target (16-26% upside) if athleisure rebounds, rivaling Nike’s 10% YTD gain.

• LULU Bear Case: A 20-30% slide to $140-$160 looms if consumer spending stalls, with inventory risks at 15% above last year.

• NVO Bull Case: At $50.20, a 12x P/E and $9.8 billion sales suggest a $60-$65 target (19-29% upside) if Ozempic pricing holds, edging LLY’s 40x.

• NVO Bear Case: A 15-20% drop to $40-$42 risks if Lilly dominance grows or patents expire.

• LLY Bull Case: At $831, a 40x P/E reflects growth (29% revenue rise), with a $900-$950 target (8-14% upside) if Mounjaro sales hit $15 billion in 2025.

• LLY Bear Case: A 10-15% dip to $700-$750 could hit if valuation concerns persist or competition intensifies.

Buffett’s UNH bet at $314 (now $268) invites a buy, while LULU, NVO, and LLY offer dip plays if support holds.

Trading Strategies: Turn Crashes into Cash

Short-Term Plays

• UNH Dip Buy: Buy at $260-$265, target $300-$310, stop at $250. A 13-19% gain if Buffett’s move gains traction.

• LULU Rebound: Buy at $190-$195, target $230-$240, stop at $180. A 18-23% upside if retail perks up.

• NVO Recovery: Buy at $48-$50, target $60-$65, stop at $45. A 20-32% pop if pharma stabilizes.

• LLY Scalp: Buy at $820-$830, target $900-$920, stop at $800. A 8-11% gain on earnings momentum.

• Options Play: Sell $280 UNH calls or $200 LULU calls (August expiry) for 100-150% premium decay, or buy $50 NVO straddles for 200-300% on a 10% move.

Long-Term Investments

• Hold UNH: Buy at $260-$265, target $350-$400 by 2026, for 32-51% upside if healthcare turns. Stop at $240.

• Hold LULU: Buy at $190-$195, target $280-$300, for 44-53% upside if athleisure rebounds. Stop at $170.

• Hold NVO: Buy at $48-$50, target $80-$90, for 60-80% upside if diabetes demand grows. Stop at $40.

• Hold LLY: Buy at $820-$830, target $1,100-$1,200, for 33-45% upside with drug pipeline. Stop at $700.

• Defensive Pick: Buy PepsiCo (PEP) at $185-$187, target $200-$210, for 7-13% upside. Stop at $180.

Hedge Strategies

• VIXY ETF: Buy at $14, target $17, stop at $12, to hedge volatility or tariff risks.

• SPY Puts: Use puts at $646 for a 5-10% market drop if sentiment sours.

• Gold ( $SPDR Gold Shares(GLD)$ ): Buy at $200, target $220, stop at $190, as a safe-haven play.

My Trading Plan: Betting on the Dip

I’m eyeing these crashed stocks for value plays. I’ll buy UNH at $260-$265, targeting $300, with a $250 stop, following Buffett’s lead. I’ll grab LULU at $190-$195, aiming for $230, with a $180 stop, on a retail rebound. I’ll add NVO at $48-$50, targeting $60, with a $45 stop, if pharma stabilizes, and LLY at $820-$830, targeting $900, with a $800 stop, on drug growth. For balance, I’ll pick PEP at $185-$187, targeting $192, with a $180 stop. I’m hedging with VIXY at $14, targeting $16, and holding 20% cash for a tariff dip or probe news. I’ll monitor UNH’s Medicare updates and LULU’s inventory.

Key Metrics

The Bigger Picture

UNH’s 10% jump to $268 after Buffett’s $1.6 billion bet, alongside LULU’s 50% crash to $198, NVO’s 40% drop to $50.20, and LLY’s 15% dip to $831, highlight oversold large-caps ripe for Buffett’s “cigar butt” strategy. The S&P 500’s 6,466.58 and Bitcoin’s $124,002 fuel optimism, but a 10-15% pullback to $225 (UNH), $140 (LULU), $40 (NVO), or $700 (LLY) threatens if tariffs or sector woes deepen. Dip buys at current levels target $300-$320 (UNH), $230-$250 (LULU), $60-$65 (NVO), and $900-$950 (LLY), with upside potential outpacing peers if fundamentals recover. Hedge with VIXY or GLD and watch for catalysts. These crashes could be your golden ticket—act with precision.

Which crashed stock will you bet on? Share your dip-buying plan below! 🎁

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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