Today’s Stock of the Week is a drug delivery company. To find out what that means and why it’s a good industry to invest in, read more below.

Drug Delivery

McKesson Corporation (MCK) is in a crucial position in modern health care. It distributes pharmaceutical and medical supplies and provides information-technology services for hospitals, physician offices and other health-care providers.

Persistent worries about possible government price controls on medications have hurt the stock—but McKesson is a drug distributor, not a producer or researcher. Its services are necessary for firms to get their drugs into the marketplace no matter what the price of medicines. It also has no inventory issues as drug companies themselves might have.

McKesson has superior financial strength and, as a result of a restructuring over the past 18 months, it has reduced costs and improved delivery times—becoming the most efficient operator in its sector.

Health-care costs are sure to keep rising, and the efficiency of McKesson’s well-managed delivery system actually can help keep health-care costs down. Revenue of $191 billion in fiscal 2016 should rise to $200 billion in fiscal 2017 and $215 billion in fiscal 2018. The small dividend of $1.12/share/yr., recently yielding 0.7%, could be raised further and appears secure.

Earnings per share: 2018 est./$14.50…2017 est./$13.00…2016/$12.08. (Fiscal year ends March 31.)

This Week’s Expert

staton_billBill Staton, CFA, is chairman, Staton Financial Advisors, LLC, Charlotte, North Carolina, which manages $121 million. StatonFinancial.com