Is There Now An Opportunity In McKesson Corporation (MCK)?
Today we're going to take a look at the well-established McKesson Corporation (NYSE:MCK). The company's stock received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $167.63 at one point, and dropping to the lows of $146. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether MCK's current trading price of $147.17 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MCK’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for MCK
What's the opportunity in MCK?
Good news, investors! MCK is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $224.19, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that MCK’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of MCK look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of MCK, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although MCK is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to MCK, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on MCK for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on McKesson. You can find everything you need to know about MCK in the latest infographic research report. If you are no longer interested in McKesson, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
