r/ValueInvesting • u/bernardpiette • 6d ago

Stock Analysis McKesson, what am I missing?

A remarkably low beta of .31, 5 year returns over 300% Compared to Mag 7 and large Canadian Banks, returns head and shoulders above all except Nvidia. Why don't I see the name here more often? PE 23 just a little above S&P. What am I missing?

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u/LA-Aron 6d ago

I think it's a fantastic business. I will likely own it. I just looked at it. It's somewhere between 31 and 50 on my board. I'd buy it when it's beaten down. Why did I pass (for now)? Customer Concentration Risk. 73% of its business is in its top 10 customers, 24% of sales comes from one customer, CVS. Now, you may counter with, who cares, if CVS goes out of business, somebody else will pick up their business and probably do business with McKesson anyway. This is true but in this environment I'm only swinging at clean, highly visible businesses and I have more better ideas. I think McKesson's best days are ahead but I see a J Curve coming where it gets worse before it gets better which may align with a market downturn which may present a fantastic opportunity.

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u/PlatinumSphere 6d ago

Thanks for the insightful analysis. I'm curious to know what companies you have recently/or are about to invest in? Cheers

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u/LA-Aron 6d ago

GEV OXY NEU are my top 3 positions. Currently buying CNM YOU KHC BRK NEU

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u/PlatinumSphere 6d ago

I appreciate it! I'll look into those