Cardinal Health working on breaking through resistance
Cardinal health is currently sitting at a resistance level that held from 2000-2013. From 2014-2018 it traded above this resistance level, but in 2018 it dropped back below it. For the last two years, the stock has been trying to break through this level, but has been rejected roughly 19 times. Thanks to trend line support, we're coming toward a decision point within the next few months. I think there are several good reasons to think we could see a successful breakout soon.
Valuation
I estimate CAH's forward P/E below 9, and its forward P/S at an amazing 0.09. The stock should have a forward dividend yield of about 3.5%. It's not much of an innovator, but its pace of patent filing has been picking up over the last few years. CAH has been growing earnings at an annual rate of about 1.5%, sales at a rate of over 2%, the dividend at 0.5%, and free cash flow at a rate 4%.
So it's a growing company with lots of free cash flow and a very attractive PEG ratio. I estimate that CAH has about 17% upside to its median price multiple of the last 4 years, so the stock looks undervalued here.
Sentiment
S&P Global Market Intelligence gives CAH an average rating of 86.75/100. It gets a better-than-average ESG score as well. The average analyst score, according to Thompson-Reuters Starmine, is 9/10. This score has recently increased by several points. Open interest from option traders is in bullish territory, at 0.9. Technicals are bullish, and CAH has 17.5% upside to the average analyst price target. Overall, sentiment looks quite positive for CAH.
Valuation
I estimate CAH's forward P/E below 9, and its forward P/S at an amazing 0.09. The stock should have a forward dividend yield of about 3.5%. It's not much of an innovator, but its pace of patent filing has been picking up over the last few years. CAH has been growing earnings at an annual rate of about 1.5%, sales at a rate of over 2%, the dividend at 0.5%, and free cash flow at a rate 4%.
So it's a growing company with lots of free cash flow and a very attractive PEG ratio. I estimate that CAH has about 17% upside to its median price multiple of the last 4 years, so the stock looks undervalued here.
Sentiment
S&P Global Market Intelligence gives CAH an average rating of 86.75/100. It gets a better-than-average ESG score as well. The average analyst score, according to Thompson-Reuters Starmine, is 9/10. This score has recently increased by several points. Open interest from option traders is in bullish territory, at 0.9. Technicals are bullish, and CAH has 17.5% upside to the average analyst price target. Overall, sentiment looks quite positive for CAH.
Comment:
I took quite a large position in this and am glad I did, because we're up 4% today!