Health care products distribution giant McKesson, with roughly $275 billion annual sales, saw a welcome improvement to its ratings Tuesday as McKesson stock got a Relative Strength (RS) Rating upgrade from 69 to 72. The company will report fiscal Q2 results Wednesday after the close.
The RS Rating upgrade comes after McKesson's profit growth improved significantly over the past three quarters. It rose from a 1% decline in earnings per share to 12% growth and then a 23% surge to $7.19 per share last quarter. The upgraded 72 RS Rating shows that McKesson stock topped 72% of all stocks, regardless of industry, for stock price appreciation over the past year.
Research reveals that the market's biggest winners often have an RS Rating north of 80 in the early stages of their moves. See if McKesson can continue to show renewed price strength and clear that threshold.
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McKesson Stock A Favorite Of Big Funds
Among its other key ratings, McKesson has a terrific 95 Earnings Per Share Rating, putting it in the top 5% of companies for profit growth. It has an OK but not great 78 Composite Rating, a composite of the most important stock metrics. On the upside, its B Accumulation/Distribution Rating, on an A+ to E scale, shows that big funds are buying more of its shares than selling.
McKesson stock dropped to a near-term intraday low 331.75 on March 15. It's risen 22% from there to close at 405.02 Tuesday.
Longer term, McKesson more than tripled from a 112.60 low at the end of March 2020 amid the Covid market crash.
McKesson stock traveled in a fairly narrow range from the beginning of November last year until it broke out above the range on June 16, rising to an all-time high 429.75 on June 30. It's consolidated from there. Now is not an ideal time to jump in since it isn't near a proper buy zone, but see if the stock is able to form a chart pattern and break out.
Profit Jumped 23% Last Quarter
McKesson saw both earnings and sales growth rise last quarter. EPS grew 23% to $7.19 on a 4% increase in revenue to $68.9 billion, up from 3% growth the prior quarter. McKesson plans to announce fiscal first quarter earnings after the market close on Wednesday.
McKesson stock holds the No. 4 rank among its peers in the Medical-Wholesale Drugs industry group. Dublin, Ohio-based Cardinal Health holds the No. 2 spot in the group. Rival AmerisourceBergen is No. 1 among the group's highest-rated stocks.
As you try to find the best stocks to buy and watch, relative price strength can help point the way to watchlist candidates.
IBD's proprietary RS Rating tracks market leadership by using a 1 (worst) to 99 (best) score that shows how a stock's price performance over the trailing 52 weeks stacks up against all the other stocks in our database.
