Dear Reader,

As promised, here is the first stock analysis (of many I’ll be sending your way) on companies that I’m convinced will beat the market over the next 3 years.

I included some important details you should know about these stock picks below, so make sure to read this email till the end.

Let’s dive into why McKesson is an investment gem!

What Does McKesson Do?

1. Medicine Distribution: McKesson buys medicines from manufacturers and delivers them to pharmacies and hospitals across North America. Think of them as the Amazon of pharmaceuticals.
2. Healthcare Technology: They also offer software solutions for managing patient records, finances, and supply chains, helping healthcare providers run smoothly and efficiently.
3. Specialty Pharmacy Support: McKesson manages complex medications for patients with rare or chronic conditions, providing clinical help, education, and financial assistance.
4. Medical Supplies: Beyond medicines, they supply medical equipment like bandages, syringes, hospital beds, and imaging tools.
5. Consulting & Outsourcing: Their experts help healthcare organizations improve operations and handle tasks like claims processing and customer service.

Why Invest in McKesson?

1. Unmatched Distribution Network: McKesson dominates North American pharma distribution with a stronghold of 35 fulfillment centers—22 in the U.S. and 12 in Canada. No one else comes close.
2. Innovative Growth Engines: Oncology services and Rx Technology Solutions are turbocharging profits. These pillars are game-changers, providing a major boost.
3. Wide Moat, Wider Margins: Stealing market share from rivals like Cardinal Health. Even small margin tweaks mean massive profit jumps.
4. Financial Muscle: Over $300 billion in sales. Yes, with a "B." Free cash flow fuels aggressive share buybacks, boosting your EPS.
5. Safety Net: Low volatility (beta of 0.45), high returns (7,000 % since IPO). Ride the growth with less risk.

What Could Go Wrong with McKesson?

1. Customer Dependence: A significant chunk (68%) of McKesson's revenue comes from its top 10 customers. If one big player like CVS Health (27% of revenue) jumps ship or goes bankrupt (like Rite Aid did), that’s a major hit.
2. Legal Risks: The opioid crisis cast a long shadow. While McKesson settled numerous lawsuits, legal liabilities in the pharma supply chain could rear their heads again.
3. Capital Missteps: McKesson generates immense free cash flow. If management misallocates this cash—say, making expensive, unwise acquisitions—investor confidence could plummet.

3 Important Things to Know About These Emails

1. Success Rate: Let’s set the record straight from the beginning—not every stock I recommend will beat the market. I estimate around 60% will, and that’s enough to build a portfolio that outperforms.
2. Selection Process: I'm not personally investing in each and every one of these stocks. These picks are driven by quantitative analysis and may not always pass my qualitative tests.
3. Updates: I'll provide frequent (probably quarterly) updates on how an equal-weighted portfolio of these stocks performs for full transparency.

As always, please remember this isn't investing advice—make sure to read our ​disclaimer​. Invest at your own risk.

Happy investing!