What we have today in MCK is the largest drug distributor in the US, with a very stable and growing business. It is very cash-generative, doesn’t need much capital to grow, and has a very high return on capital. Owning the stock was very stressful at times but also very rewarding. But the best is yet to come for MCK.
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McKesson
How our selling practice differs between high-growth companies with long runways for compounding and slow-growth companies.
Amazon.com has announced an online pharmacy offering. How big of a punch could this be to drug distributors McKesson, Cardinal Health and AmerisourceBergen?
Why pharmacy stocks are a good investment right now? Let’s take a look at two specific companies, McKesson and Walgreens Boots Alliance.
Pharma distributors have been wrongfully blamed for the opioid epidemic, because they are not actually responsible for the misuse of these drugs or the fact that doctors overprescribe them.
It is hard to say anything about McKesson that we have not said before — it is a high-quality business with extremely cheap shares. McKesson is a pharmaceutical distributor with extremely undervalued stock.
Companies are worried about Amazon’s potential entry into the retail pharmaceutical industry. However, a slower changing older population, combined with the fact that Amazon’s sales would only represent a small portion of total drug sales, suggests that it is unlikely to have a significant impact on the industry.
Amazon’s entrance into the US healthcare market caused stocks in the healthcare sector to drop, but upon further investigation it became evident that these concerns were overblown.
Last week I explained why my firm is investing in pharmaceuticals stocks, despite the sector being a favorite punching bag of politicians. I noted that we have recently added to…