Cardinal Health Long Overdue A Bounce

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.

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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.

Implied Volatility In Cardinal Health

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