At a time when the volatility of U.S. stocks has intensified, Buffett, the “stock god” who has always adhered to the investment principle of “others are fearful and greedy”, has once once more practiced the investment principles and aggressively bought US stocks.
The 13F document shows that Berkshire opened a long position in the first quarter of Occidental Oil (OXY-US), HP (HPQ-US), Citi (C-US), Paramount Global Class B shares (TO US、 Celanese (CE-US)、McKesson(MCK-US)、Markel(MKL-US)、Ally Financial(ALLY-US) and other stocks.
Futu Niu Niu reported that perhaps investors will say, why have you never heard of McKesson? You are not the only one with this question. As the largest drug distribution giant in the United States, McKesson is a low-key “bull stock” in the face of the surging US stock market.
This company is so low-key that few people put forward opinions related to its share price, but its share price is not low-key, and the weekly market price of this company has undoubtedly become a beautiful landscape in the US stock market.
In the context of continued market volatility, McKesson’s return this year is still 32%, significantly outperforming the broader market. What is the charm of McKesson to attract Buffett?
Founded in 1833, McKesson is a world-renowned enterprise providing pharmaceutical distribution and medical IT. Currently, only pharmaceutical distribution accounts for more than 33% of the US market, and 76% of US hospitals are McKesson customers.
Buffett “buy big, don’t buy small, buy old and don’t buy new.” All heavy positions are leaders in major industries, and they are also giants in the American corporate world. He does not intervene in industries and companies that are in the stage of free competition, and only buys super-core leading stocks in industries that have achieved a complete oligopoly, Coca-Cola (KO-US), American Express (AXP-US) and other stocks that are loved by gods, have basically occupied half of the entire industry.
Although these giant enterprises are often criticized for their lack of growth, the stable internal management system and mechanism formed by long-term operation, coupled with the very stable industry competition entering monopoly, the growth of these enterprises is not inferior.
Buffett once said: “I have been pursuing consumer monopoly companies all my life.” In his eyes, such companies are monopolistic, and even in a recession, profits will not be severely compressed.
As a U.S. medical distribution giant, McKesson has overwhelming control over the U.S. drug distribution system, and McKesson’s large scale gives it more dominance in negotiating prices with upstream pharmaceutical giants.
In addition, relying on differentiated competitive advantages, statistics show that McKesson’s performance has achieved a compound annual growth rate of 12.26% from 1996 to 2016, which is greater than regarding 10% of the entire health care industry in the United States.
The latest financial report shows that McKesson’s 2022 revenue is $212.149 billion, a sharp increase of 12%, and the adjusted diluted earnings per share is $23.69, a year-on-year increase of 38%.
After McKesson released its earnings report, Credit Suisse, Deutsche Bank, and Mizuho successively raised their target prices to $377, $343, and $331, respectively. McKesson shares closed at $327.83 on Monday (16th), a 10.12% upside from the Wall Street average of $361.