Healthcare
The drug distributor possesses three of the most prized attributes of any stock 1) strong, predictable growth prospects; 2) low business risk; and 3) normalised FCF generation capability of >$2bn p.a.. CAH trades at only a 13.4x P/E multiple, a ~35% discount to the S&P 500 Index, while also trading at a substantial discount to Cencora and McKesson (avg. P/E 17x), despite having broadly similar growth prospects, cash-generating ability and balance sheet strength. If CAH shares were accorded a P/E multiple in line with the S&P 500, a very reasonable target, the stock would be trading ~50% higher than the current price.
Edition: 189
- 28 June, 2024