Stockchase Opinions

Stan Wong McKesson Corp MCK-N PAST TOP PICK Nov 07, 2024

(A Top Pick Nov 16/23, Up 34%)

Earnings today impressed the market. Trades around 16-17x forward PE, 11-12% EPS growth rate. PEG ratio is 1.4x, pretty good. Great, long-term secular growth name. Few competitors plus 33% market share means substantial pricing leverage.

$610.435

Stock price when the opinion was issued

wholesale distributors
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SELL

Got stopped out when it gapped lower. You need only 20 positions to be diversified; you don't want to look like the index. If something isn't behaving as you expect, based on what you know, step aside and let things develop.

Broken down technically. Well below 200-day MA, which has rolled over. Has work to do, wouldn't put money here today. Others in the sector are doing better.

BUY

Healthcare space provides nice combination of growth with stability, in case we get into latter stage of economic cycle. 

DON'T BUY

Drug distribution is a really low-margin business, which gives you less tolerance throughout your whole business. In US healthcare, they're always looking for ways to squeeze out value for consumers. Not a lot of avenues for growth.

BUY

It was getting pricey, so he took profits around $616. He's holding, because of a strong long-term outlook. Are fueled by the weight-loss drugs and other pharmaceuticals, of which they are the largest U.S. distributors.

PAST TOP PICK
(A Top Pick Dec 20/23, Up 38%)

US healthcare has been a minefield. Management lowered guidance, stock drew down sharply. But then it had a great quarter and shares rallied. #1 market share. Demographic and morbidity tailwinds. Still likes.

TOP PICK

Growing at double-digits and trading around 19x PE. Much growth, a third, comes from the weight-loss drugs, mostly from LLY and Novo Nordisk. An aging population will need more medications.

(Analysts’ price target is $658.83)
PAST TOP PICK
(A Top Pick Jan 11/24, Up 20%)

15% EPS growth rate, but paying only 17x forward PE. So PEG ratio is 1.1x, fairly cheap. Long-term, aging demographic trends give long runway for growth. 200-day and 200-week MAs are pushing higher. Outpacing S&P 500 since early 2019.

COMMENT

It is a large distributer of drugs which is a volume based business and has low margins. It is not expensive.

BUY
Tariff-proof stock?

Certainly some stocks are less vulnerable to issues involving tariffs. What comes to mind are healthcare companies. You could look at some of the beaten-down companies that really didn't do well last year, as they're doing quite well today. Try this name, which he owns.