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Stock Strategist

McKesson's Our Favorite Undervalued Healthcare Distributor

We like its improving operational dynamics and less uncertain near-term environment.

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Healthcare-related distributors have had a rough couple of months, with the stocks of medical, dental/veterinarian, and pharmaceutical wholesalers falling by material amounts. Of note, dental/veterinarian distributor  Patterson PDCO and medical distributor  Owens & Minor (OMI) have both fallen into materially undervalued territory.

However, we believe investors should look to drug distributor  McKesson (MCK) as the best opportunity, given its wide economic moat, clearer near-term operational outlook, improving quarterly results, and undervalued stock.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.