The shares of this drug distribution company have recently crossed over their 50-day moving average, a bullish indicator.
Cardinal Health (CAH)
From Sure Dividend
Cardinal Health (CAH) is one of the ‘big three’ United States drug distribution companies along with McKesson (MCK) and AmerisourceBergen (ABC). The company serves more than 25,000 U.S. pharmacies and provides pharmaceuticals and medical supplies to more than 70% of U.S. hospitals.
Cardinal Health is also a well-known dividend growth stock, qualifying to be a Dividend Aristocrat with 32 years of consecutive increases. In today’s overheated market, Cardinal Health is a rare example of a high-quality business trading at a bargain price. There are three main reasons for this: a price war among drug distributors, the potential entry of Amazon into the pharmaceutical industry, and Cardinal’s perceived role in the opioid crisis. While each of these issues is complex, they all have the common theme of being short-term in nature.
In the meanwhile, Cardinal Health’s valuation has plunged to very attractive levels, which more than offsets these business uncertainties. Cardinal Health’s recession-resistant presence in the healthcare industry as well as its above-average dividend yield help it to appeal to conservative investors. Altogether, we believe the short-term issues facing this company have been over-emphasized by the markets; Cardinal Health is likely to deliver strong total returns moving forward.
Ben Reynolds, Sure Dividend, www.suredividend.com, ben@suredividend.com, December 14, 2017