Today’s Daily Alert features a recommendation of Cardinal Health, Inc. (CAH $46
NYSE) from Investment Quality Trends, edited by Kelley Wright. IQT determines
undervalue and overvalue levels for individual stocks based on the premise that,
“When all other factors which rate analytical consideration have been digested,
the underlying value of dividends, which determines yield, will in the long run also
determine price.” You can see that reflected in the undervalue and overvalue levels
on IQT’s chart below, which reflect dividend increases with their stair-step pattern.
At the current dividend rate of 28 cents per quarter (for a current yield of 2.4%),
CAH is undervalued below 69 (the price level that would lower the yield to 1.6%).
Kelley R. Wright, Investment Quality Trends, www.iqtrends.com,
760-585-1459, 5/1/13