Better Business Buyer? Check out AmerisourceBergen Corporation

Chuck

This blog is dedicated to fundamental investing based on irrefutable principles of business, economics and accounting. Fundamental investors’ concern themselves with the attributes of the specific businesses they are interested in owning. The general levels of the stock markets are of little importance to them. The value represented by the price of the companies they like matters most, regardless of market levels. For one thing, fundamental investors understand that all markets, whether bull or bear, will contain overvalued, undervalued or fairly valued stocks. Obviously, there will be more bargains available in a bear market and harder to find in a raging bull market like we are in today.

Investors and speculators alike would have to agree that better businesses are better long-run investments. A strong business that is growing faster than average will generate better than average profits and cash flows. The faster the growth, the greater the future cash flows and the more valuable the business is. Most importantly, the fundamental investor knows beyond a shadow of a doubt that business results are far more important than short-term price volatility. Understanding that markets can and will mis-appraise company values from time to time, they focus on fundamental value - not price movement. When fundamental value exists they confidently invest, when valuation is excessive they, with equal confidence, sell. They never worry about how the day traders in the stock market are behaving.

I believe today’s FAST Graph video clearly validates the reality that it’s not a stock market; instead it’s a market of stocks. Better businesses produce better returns for shareholders as long as you don’t pay too much when you first invest. This is important because the price of any public company will, without fail, eventually go to its true value. Therefore, when prices are too high investors can be confident that they will correct down. The same is true for undervaluation, and also applies when a company’s stock is fairly valued like AmerisourseBergen Corporation is today. Investors should be confident that the price will react to fair value in the long run, it’s the law.

About AmerisourceBergen Corporation courtesy Reuters:

“AmerisourceBergen Corporation is a pharmaceutical sourcing and distribution services company. The Company's segments include Pharmaceutical Distribution and Other. The Company provides services to healthcare providers, and pharmaceutical and biotech manufacturers.

As of June 30, 2016, the Pharmaceutical Distribution segment consists of two operating segments, including the operations of AmerisourceBergen Drug Corporation (ABDC) and AmerisourceBergen Specialty Group (ABSG), which distributes specialty drugs to their customers.

Servicing healthcare providers in the pharmaceutical supply channel, the Pharmaceutical Distribution segment's operations provide drug distribution and related services. The Other segment consists of the operations of various segments, including the AmerisourceBergen Consulting Services (ABCS), the World Courier Group, Inc. and the MWI Veterinary Supply, Inc. ABSG operates distribution facilities that focus primarily on complex disease treatment regimens.”

https://www.youtube.com/watch?v=Np_wWmmuPLk

Disclosure: Long ABC at the time of writing.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

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