Vishnu Lekraj: Over the last few years there have been several headwinds that have blown through the U.S. healthcare system. The new administration, uncertainties surrounding the Affordable Care Act, and uncertainties surrounding pharmaceutical pricing have pressured several stocks within the U.S. healthcare economy. However, we believe a lot of these headwinds are undue and provide investors an opportunity here to buy stocks at cheap prices.
Currently, we believe two stocks in particular, Express Scripts and McKesson, present great opportunities to buy high-quality firms at cheap prices. Both stocks we have rated as wide moat. We believe both of these stocks are undervalued, and they're both positioned very well to produce economic profitability over a significant period.
McKesson is a large global pharmaceutical distributor that can't be displaced by any other competitor within its niche because of its large position and its ability to source pharmaceuticals at the cheapest price globally.
Express Scripts controls about 30% of all pharmaceutical prescriptions in the U.S. annually. Its position is rock solid and there's not many competitors or other firms that compete with its services.
We believe these firms are positioned well to produce economic profitability over the longer term and will be able to ride out any major near-term headwinds as a result of uncertainties surrounding economic policies or surrounding pharmaceutical pricing.