Jim Cramer’s Latest Lightning Round: 10 Stocks to Watch

2. McKesson Corporation (NYSE:MCK)

Number of Hedge Fund Holders: 70

McKesson Corporation (NYSE:MCK) is a Texas-based company that offers healthcare services. It operates through several segments. The U.S. Pharmaceutical segment distributes a wide range of pharmaceutical products and offers support services to community-based oncology practices and pharmacies. The RxTS segment addresses medication challenges by connecting patients, pharmacies, and healthcare providers.

Meanwhile, its Medical-Surgical Solutions segment provides medical-surgical products and logistics to healthcare providers. Lastly, the International segment extends the company’s reach by serving wholesale and retail customers across Europe and Canada.

Cramer mentioned the company and said:

“It’s time to buy it. You know they’re not just a middleman. They do a lot of good things and I think the stock has had way too big a hit. It’s now selling at a below-market multiple. I’m ready to start buying. Don’t buy all at once. Buy in a pyramid style.”

In its fiscal 2025 first quarter, McKesson (NYSE:MCK) reported revenue of $79.28 billion, which fell short of analysts’ expectations of $82.53 billion. However, adjusted EPS reached $7.88, which exceeded forecasts of $7.21.

In terms of shareholder returns, it distributed $609 million, comprising $527 million in share repurchases and $82 million in dividends.

In August, McKesson (NYSE:MCK) announced its intent to acquire a controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC (Core Ventures). It involves a cash purchase of approximately $2.49 billion for a roughly 70% ownership stake.

Once the acquisition is finalized, Core Ventures will be integrated into McKesson’s Oncology platform, with its financial results incorporated into the U.S. Pharmaceutical segment.

Alluvium Asset Management stated the following regarding McKesson Corporation (NYSE:MCK) in its Q2 2024 investor letter:

“McKesson Corporation (NYSE:MCK), the drug distributor, was up 8.9%. We wrote in our March report (after it reported third quarter earnings and returned 16.1%) that we would defer updates until the full year result was released, and that we anticipated an increase to our valuation. And indeed that is what happened, with our estimates of “owner’s earnings” increasing by low double digits and our valuation increasing by 15%. Although it trades at a premium of 13% to that valuation, we are very much aware of our conservatism and feel comfortable in maintaining our 7.1% position.”