This company provides pharmaceuticals, medical supplies, and health care information technologies to the healthcare industry primarily in the United States, and its earnings are growing at double-digit rates.
McKesson Corp (MCK)
from US Investment Report
Selecting new recommendations in a weakening market is a daunting task, to say the least. Our internal Watch List typically contains about 100 stocks we are considering as additions to the USIR Recommended List. But in this topsy-turvy market the Watch List numbers fewer than 30 candidates who appear capable of generating 20% or more price appreciation.
McKesson Corp (MCK) is a San Francisco giant with revenues nearing $130 billion from medical supplies and medical technologies. Analysts foresee 5-year earnings growth of 19% a year, quite a feat for a company so large, progressing from $6.33 per share in 2013 to $8.54 this year, $9.84 next year and $11.18 in 2016. Its PEG is a very attractive 0.88.
The shares are currently rated a strong buy by 10 analysts and a buy by one analyst.
Added in Quickel’s February 17 hotline: Valuation levels are always a concern when stocks run as far and as fast as they have. In the 14 months since the end of 2012 our Conservative Growth, Growth Leaders, and Emerging Growth Portfolios have soared 45%, 60% and 70%, respectively—versus 26% for the S&P and 37% for the Nasdaq. But underlying corporate earnings have jumped too. As a result, the S&P 500’s forward P/E is still a moderate 14.6 times next year’s estimated earnings. The median P/E of the fifty stocks on the USIR Recommended List is just 15.8. Best of all, their median PEG ratio is a mere 0.83, taking into account their expected earnings growth of 19.0% a year. That portends further price gains.
Stephen Quickel, www.usinvestmentreport.com, 215-862-0399, January 31, 2014