Shares of medical products distributor McKesson are showing unusual strength. On Thursday, the Relative Strength (RS) Rating for McKesson stock got an upgrade from 73 to 81, as it rose into a higher percentile, passing a milestone.
The 81 Relative Strength Rating shows that McKesson stock has outperformed all but 19% of all stocks for price performance over the past year. Market research shows that stocks that go on to make the biggest gains, the best stocks to buy and watch, typically have an 80 or better RS Rating in the early stages of their moves.
McKesson distributes specialty care, health care products, and medical supplies and equipment to pharmacies and hospitals.
McKesson Stock Among Top 18% Overall
Additionally, Irving, Texas-based McKesson carries an 86 Earnings Per Share Rating, putting it in the top 14% of companies for earnings growth the past three years, with special focus on the last couple of quarters. McKesson stock has an 82 Composite Rating, out of 99. IBD's Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better. Its C+ Accumulation/Distribution Rating shows that big money investors like insurance funds are buying more shares than selling, a bullish indicator.
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Meanwhile, McKesson stock is trying to complete a consolidation with a 401.88 entry. See if it can clear the breakout price in volume at least 40% higher than normal. McKesson stock fell Thursday amid market consolidation, but rose nearly 4% this past week, to close at 370.09.
Although distributors lag medical companies, medical companies are coming in favor again, Ed Carson said in an IBD medical companies roundup story Friday. "Medical stocks are coming into favor again — with companies involved in biotech, pharmaceuticals, medical products and more bouncing back," Carson said. That could lift McKesson and other distributors.
McKesson Profit Rose 12% Last Quarter
Earnings grew 12% last quarter to a hefty $6.90 per share. Revenue edged up 3% to $70.5 billion. It's not unusual for multibillion-dollar companies like McKesson to report slower sales growth than younger, fast-growing stocks.
McKesson stock earns the No. 3 rank among its peers in the Medical-Wholesale Drugs industry group. Cardinal Health is No. 2 and AmerisourceBergen is No. 1 in the group. AmerisourceBergen says it will change its name to Cencora this year after it completed its acquisition of Alliance Healthcare, which will also be under the Cencora name, last year.
IBD's unique RS Rating identifies market leadership by showing how a stock's price action over the last 52 weeks compares to that of other stocks on the major indexes.
