Cardinal Health Inc (CAH-N)

Likes it after restructuring. Buy on this dip.

It has had a nice pullback here and he would buy more at $56.50. His model value is just above $66 right now.

(A Top Pick Jan 17/17. 0% return.) There are really 3 players that dominate the entire space, and she switched to the leading player, Amerisourcebergen (ABC-N).

(A Top Pick Jan 17/17. Down 18%.) A big Pharma distributor. There have a lot of things coming at them. It is so ingrained in the healthcare space in the US, and there are really 3 companies that control the whole thing. The issue has been around generics price deflation, and the cycle was much more severe than anything they had seen previously. There is also the Amazon factor. Had a spotty performance on the medical device side, and now they are going through a CEO transition. The company has about an 8% free cash flow yield. For that type of a business, when you start seeing easier comps, stabilization and deflation trends which really just started this quarter, the discount to the market is pretty significant, and she is expecting the whole group to trade higher.

The healthcare space has been really beaten up since the election started. They have exposure to drug inflation and the pricing side of things. They are really only one of three distributors of pharma in the US. They have 8-9% of free cash flow. (Analysts target: $81.88).

MCK-N vs. CAH-N. They have done very much the same thing, so she has no preference. MCK-N is certainly the leader in the group. The peak was last summer at $15. If MCK-N moves lower she would buy a lot more of it.

MCK-N vs. CAH-N. He likes them. Those running for election are talking limits of drug prices. He likes all but Cardinal health is the best.