Penn Wealth Publishing

2018.12.16 Penn Wealth Report Vol 6 Issue 06

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16 Dec 2018 Penn Wealth Report volume 6 issue 06 13 Penn Wealth Report Copyright 2018. All Rights Reserved. investment intelligence Under The radar Four companies being ignored—or missed—by the financial press McKesson Corp. Medical Distribution McKesson Corp (MCK $117-$125-$179) is a $24 billion distributor of medical prod- ucts and pharmaceuticals in the US. ough you may not be familiar with the name, McKesson is the largest pharmaceutical distributor in the country, and the key supplier to CVS Health (mail order service) and Walmart. e company has nearly doubled its reve- nue over the past decade, from $106 billion in FY09 to $208 billion in FY18. ere are only three major drug distributors in the US ($100B+ in annual revenue), and we believe McKesson is the most undervalued pick in the bunch. Our price target is $200/share. Acadian Timber Corp. Paper & Forest Products Canadian Apartment Properties Real Estate Investment Trust REIT—Residential KOA Corp Electronics Equipment & Components Acadian Timber Corp (ADN.TO $15-$15-$20) is a $247 million Canadian supplier of forest products. e company's products include: softwood and hardwood sawlogs, pulp- wood, and biomass by-products (organic matter used as fuel). e company produces a steady annual revenue stream and positive net cash flows year-after-year. At $14.75, the company is sitting at its 52-week low and has a relative strength index (RSI) of 20, indicat- ing an oversold condition probably exists. Acadian's PE ratio is 11. We rate the fair value of the firm at $20 per share. The Canadian Apartment Properties Real Estate Investment Trust (CDPYF $26-$34- $38) engages in the acquisition and subsequent leasing of multi-unit residential rental properties located near major urban centers across Canada. CAPREIT's holdings are geared toward the midtier and luxury rental markets, which tend to be less affected by eco- nomic downturns. All of the trust's revenue is generated from the rental income of tenants. As one of Canada's largest residential landlords, CAPREIT controls nearly 51,000 residen- tial units. e company's PE ratio is 7, and the dividend yield is 3%. KOA Corp (KACPF $7-$7-$7) is a $264 million Japanese micro-cap engaged in the development, manufacture, and sale of electronic components. It offers products such as resistors, integrated circuits (IC), composite parts, thermal sensors, inductors, and fuses. Founded in Tokyo in 1940, KOA is one of the world's largest manufacturers of SMD resistors (surface-mount devices—an electronic device in which the components are mounted directly onto the surface). KOA employs nearly 4,000 workers around the world, with 26 production facilities sprinkled across Japan. e company has sales and distribu- tion locations in the US, Germany, China, and Singapore. KOA has a PE ratio of 9, and a dividend yield of 4%. 3 2 1 4

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