Daily Stock Pick: Cardinal Health

This week, I'm looking for the sixth healthcare representative of six for my Ivy portfolio.

That healthcare sector includes ten industries all related to testing, diagnosing and treating what ails us. Healthcare industries are: biotechnology; diagnostics & research; drug manufacturers - major and - specialty & generic; healthcare plans; long-term care facilities; medical care; medical devices; medical distribution; medical supplies.

Today I'm reviewing a large-cap medical distribution firm named Cardinal Health Inc. Their trading ticker symbol is CAH. I last reported on Cardinal Health Inc on October 17, 2018.

Cardinal Health is the third- largest global logistics provider engaged in wholesale pharmaceutical and medical products.

Similar to the other two peers, the company has evolved over time and has become entrenched in the sourcing and distribution of brand-name and generic pharmaceuticals and related services to hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices.

Through acquisitions, Cardinal Health has the ability to manufacture commodity products and certain medical devices.

It also distributes a range of national brand products; and medical products to patients' homes, as well as other healthcare providers.

Cardinal Health, Inc. was founded in 1979 and is headquartered in Dublin, Ohio.

I use three key data points to gauge dividend paying equities or funds like Cardinal Health Inc:

(1) Price

(2) Dividends

(3) Returns

Besides those three, several other keys will finally unlock an equity or fund in which to invest.

Those three basic keys, however, best tell whether a company has made, is making, and will make money.

CAH Price

Cardinal's price per share closed at $47.10 Friday. A year ago its price was $49.15. Price fell $2.05 or 4.17% in the past year.

Assuming Cardinal's stock trades in the range of $40.00 to $55.00 this year, Cardinal's recent $47.10 price could rise by $2.90 and go to $50.00 by early July 2020.

CAH Dividends

Cardinal's most recent quarterly dividend is $0.4811 payable, July 15th.

That $0.4811 Q payout equates to an annual dividend of $1.92 which produces a yield of 4.09% based on Friday's $47.10 closing price.

Gains For CAH?

Adding the $1.92 annual estimated dividend to my $2.90 estimate of Cardinal's price upside shows a $4.82 potential gross annual gain, per share, which will be reduced by costs to trade those shares.

Say we pay a little under $1,000.00 today at the $47.10 recent stock price would buy 21 Cardinal Health Inc equities.

A $10 broker fee paid half at purchase and half at sale will cost us $0.48 per share.

Subtract that $0.48 brokerage cost from the estimated $4.82 gross annual gain leaves a net gain of $4.34 X 21 shares = $91.14 or a 9.2% net gain on a $989.10 investment.

Therefore, Cardinal Health Inc whose trading ticker symbol is CAH now shows a possible net gain of 9.2% including a 4.09% dividend yield.

Nineteen brokers track Cardinal Health Inc stock:

One broker says "Buy" CAH.

Two brokers say CAH will "outperform" peers.

Thirteen brokers say "Hold" your CAH shares.

One broker says CAH will "underperform" peers.

Two brokers say "sell" CAH.

So I'll get no argument from the pros over my wild guess at CAH's future price.

Therefore, you can look at Cardinal Health Inc and see it has made money, is making money, and could net an 9.2% gain including a 4.09% dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. The actual results remain to be seen to determine if Cardinal Health Inc is worth your time and money.

Disclosure: This article was compiled by Rydlun & ...

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BreakingBad News 5 years ago Member's comment

I like $CAH, I think it has room to grow.