McKesson Corporation (MCK): A Bull Case Theory

We came across a bullish thesis on McKesson Corporation on Value investing subreddit by entropybender. In this article, we will summarize the bulls’ thesis on MCK. McKesson Corporation's share was trading at $711.42 as of September 12th. MCK’s trailing and forward P/E were 28.49 and 18.94 respectively according to Yahoo Finance.

McKesson Corporation (MCK) is resuming its uptrend after a correction, presenting a compelling investment opportunity. The company is the dominant player in U.S. pharmaceutical distribution, handling roughly one-third of all drugs in the country. This scale provides McKesson with strong competitive moats, pricing power, and steady cash flow, making it a critical “toll road” of American healthcare. Despite this, the market is undervaluing the company, focusing narrowly on its seemingly thin 1% margins rather than its exceptional returns on capital and consistent free cash flow generation.

Trading at just 16.5x free cash flow while growing earnings at approximately 13% annually, McKesson offers a highly attractive risk/reward profile. The company’s demographic tailwinds ensure continued demand growth, and its strategic pivot into higher-margin oncology services positions it for even stronger profitability over time. For long-term investors, this combination of predictable cash flow, industry dominance, and growth initiatives suggests compounded wealth creation at an estimated 10–12% annually, with minimal downside risk.

Conservatively, at the current stock price, an investment of $10,000 effectively purchases $607 of owner’s earnings that are expected to compound at roughly 8.6%, highlighting both the undervaluation and resilience of the business. Overall, McKesson offers a rare opportunity to invest in a recession-resilient healthcare infrastructure business with robust cash generation, high returns on capital, and structural growth catalysts, making it attractive for patient, long-term-oriented investors seeking steady compounding and capital preservation.

Previously we covered a bullish thesis on Quipt Home Medical Corp. (QIPT) by Inflexio Research in March 2025, which highlighted the company’s recurring revenue, strong position in home healthcare equipment, and potential for a strategic sale. The company's stock price has appreciated approximately by 16.95% since our coverage as initial headwinds eased and fundamentals improved. The thesis still stands as activist involvement and policy tailwinds continue to support upside. Entropybender shares a similar perspective but emphasizes McKesson’s scale, robust free cash flow, and low risk compounding potential.

McKesson Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held MCK at the end of the second quarter which was 70 in the previous quarter. While we acknowledge the potential of MCK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.