We buy 90 shares of Cardinal Health for about $217. After the trade, Jim Cramer’s Charitable Trust will own 350 shares of Cardinal, increasing its stake from 1.46% to about 2%. We may have opened a new position in Cardinal Health too early this week, but the silver lining is that the stock’s decline is not tied to fundamentals, providing more upside to our $260 price target. Despite its resilience to rising oil prices and geopolitical turmoil, the healthcare sector is the third-worst performing group this week, and Cardinal Health has fallen victim to a market rotation away from year-to-date outperformers and toward the underperforming enterprise software group. The decline in healthcare contrasts with the idea that the conflict in the Middle East will slow the economy and push investors into more defensive stocks. For this reason, we never buy an entire position at once. Even though we have plenty of cash, we always leave room for a lower average with our new names. Also keep in mind that this new Cardinal position replaced Danaher, which has fallen about 3% in value since we exited last week. Beyond market rotation, the drug distribution group that includes McKesson and Cencora is under pressure after the former announced the resignation of its long-time CFO Britt Vitalone. The news caught the market by surprise, which explains why McKesson shares fell about 5%, making them among the worst-performing stocks of the session. But this exit is not an alarm signal. This is part of a planned transition and Vitalone will remain as strategic advisor to McKesson to support the company’s spin-off of its Medical Surgical Solutions business. In short, we are drawing on our large cash position to purchase more shares of a company that was unfairly penalized this week. (Jim Cramer’s Charitable Trust is long CAH. A full list of stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim discussed a stock on CNBC, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
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We’re drawing on our massive money holdings to purchase extra of this healthcare inventory
