We’re initiating a position in this health-care stock with a $260 price target
Shortly after the opening bell, we will initiate a position in Cardinal Health , buying 170 shares at roughly $229. Following the trade, Jim Cramer’s Charitable Trust will own 170 shares of Cardinal Health, representing 1% of the portfolio. Stocks are expected to open sharply lower on Monday as markets react to weekend strikes on Iran, with crude oil climbing above $70 per barrel and fueling worries about geopolitical risk and rising inflation. The pullback adds complexity to a market already struggling with the perceived future risks AI poses to the labor market and enterprise software companies. In his Sunday column, Jim outlined how investors are trying to navigate this period of uncertainty, and appropriately, our cash position is unusually high, providing us with a buffer in this decline. Thanks to a number of profit-taking moves and portfolio exits, our cash position is at about 15% of the portfolio. This gives us the firepower to pick up stocks that are being irrationally dragged down in the broader market sell-off and, later on, pick up other high-quality names that have come down too far. One such company is our most recent addition to the Bullpen: Cardinal Health. This backbone of the U.S. health-care industry generates about 99% of its revenue domestically, insulating it from overseas pressure. We laid out our case for Cardinal Health on Friday. It plays a major role in the health-care supply chain by supplying and distributing medicines and medical products to hospitals, retail pharmacies, and clinics. It operates effectively as an oligopoly dominated by three players, including McKesson and Cencora . It buys prescription drugs from manufacturers and distributes them to hospitals, retail pharmacies, and clinics. It manufactures and distributes items such as surgical products, examination gloves, and other medical products and supplies. It provides health-care services and solutions, including inventory management and supply chain support. A significant long-term tailwind for Cardinal Health is the aging U.S. population. Over the past 30 years, the number of Americans aged 65 and older has increased consistently. According to the company, when you are over the age of 65, you have a more than 50% chance of taking four or more pharmaceutical products. If you are over 65, there’s a 5x increase compared to those under 50. The company said there will be more Americans over age 65 every year for the next three-plus decades, creating a significant long-term tailwind to its business that won’t change with what’s happening to the broader economy. There is minimal AI disruption risk here, too. The stock got caught up in a Feb. 12 sell-off alongside logistics and transportation stocks after a small company announced a new tool aimed at reducing freight inefficiencies. It created worries that drug distribution could lose some pricing power. But the stock quickly recovered from that pullback when it realized that increased efficiencies in distribution operations could generate cost savings. Cardinal Health has been a strong performer over the past 12 months, with the stock up more than 70%. Year-to-date, shares have risen roughly 10%. Even after this run, the stock trades at just 21 times calendar year 2026 earnings estimates. That may look expensive relative to its history, but it has re-rated due to its consistent double-digit earnings-per-share (EPS) growth. Leerink raised its price target on Cardinal Health to $275 from $268 on Monday, citing fundamentals that continue to support multiple expansion. We agree with Leerink, but we’ll start this position off with a $260 price target, which still represents about 15% upside from current levels. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the 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 trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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