Temporary headwinds and a changing healthcare market has adversely affected the share price of Cardinal Health (NYSE:CAH) recently. As the chart illustrates below, sentiment is on the floor which may be unwarranted for such a quality stock. Remember Cardinal Health is a proven dividend aristocrat with sales of almost $130 billion last year. It dominates in distributorship as do the other two large companies which distribute in this sector.
Strong Dividend Growth Combined With A Historic Low Valuation
Because of the attractive valuation and strong dividend, value investors will enter here before long. I still maintain the Amazon risk here is unfounded. Downside should be limited here especially if biotech (NYSE:IBB) continues to march higher. Furthermore with a pay-out ratio of about 53%, the dividend is not at risk. In fact, dividend growth rates in CAH have been excellent over the past decade.
Source : Sentimentrader.com
Implied volatility is still pretty high in CAH at present. This means that one could use some option strategies as volatility should continue to contract here post earnings.