- A frugal dividend tempers McKesson Corporation's abundant earnings yield.
- Nonetheless, the company is the arguable leader of the health care distributor oligopoly in both fundamentals and valuation.
- McKesson's downside risks are newsworthy.
- But the stock’s compelling margin of safety appears protected by the company's enduring delivery of compounding annual growth.
(Note: subscribers to Main Street Value Investor Marketplace received the first look at this research).
Macroeconomic downside risks stemming from exorbitant CEO pay, the opioid crisis, pending healthcare reform, and evolving reinvention of retail pharmacy delivery models are newsworthy topics for McKesson Corporation (MCK).
However, as overpaid executives and other stock price thrashing issues come to fruition, the stocks of companies that are quality capital allocators such as McKesson, temporarily go on sale without compromising the recurrent delivery of compounding annual growth.
Thus, we believe MCK is perhaps a compelling asymmetric value play, rare in today’s secular bull market.