With its scandal behind it, UnitedHealth is looking good. By Thomas M. Anderson, Contributing Editor July 31, 2007 More than a year has passed since the revelation of stock-options shenanigans at UnitedHealth Group. The disclosure led to the resignation of the giant health insurer's longtime chief executive and the restatement of 13 years' worth of earnings. But with the scandal past, it's time to focus on what's left: a fast-growing insurer with the size and technological know-how to outmaneuver its rivals.Unlike most health insurers, UnitedHealth spreads its bets across the country. Moreover, it generates revenues from three different businesses: selling health insurance to individuals and employees, offering private Medicare plans and providing technology that helps organizations control health costs. And UnitedHealth has been an aggressive acquirer. Its deal to buy Sierra Health Services, slated for completion by year-end, will make UnitedHealth the top insurer in fast-growing Nevada. Tom Marsico, manager of Marsico Growth fund, is bullish on the stock. He expects earnings from all three of UnitedHealth's key businesses to grow faster than those of the overall stock market. "That's based on the company's technology advantage and its ability to guide its clients to the right doctor at the right price so they can get the best care," he says. That technology played a role in highlighting the risks of the arthritis drug Vioxx. In 2004, the insurer tracked patient data that showed Vioxx posed a higher risk of heart problems than other arthritis treatments. UnitedHealth even provides other insurers, such as Aetna and WellPoint, with its analytical tools. Advertisement Some loose ends linger from the backdating brouhaha (backdating can boost pay by making it appear that options were granted when a company's stock traded at a lower price). Federal and state regulators continue to investigate UnitedHealth, and some shareholders are suing. But the legal fallout will not have a major impact on the company's future earnings, says analyst Thomas Carroll, of broker Stifel Nicolaus. The stock (symbol UNH), at $54 in mid June, is up 28% since May 2006. But it is still well below its record high of $65, set in late 2005. It trades at 16 times analysts' estimated 2007 earnings of $3.44 a share. That price-earnings ratio is below the industry average and the same as the company's estimated long-term earnings growth rate of 16% a year. Given the company's size (its market value is $71 billion) and advantages, Carroll rates the stock a "buy" and thinks it's worth $65.