Introduction
In mid-2015, AmerisourceBergen's (ABC) stock price peaked around $115 and it has traded below that price ever since, even though earnings grew about 9% consistently every year for the past 5 years. The market hasn't given the stock any credit for this growth even though it is likely to continue for the next several years. After recently reviewing and updating over 270 non-cyclical stocks for the Cyclical Investor's Club and reflecting about the macro backdrop we are now operating in, I found some stocks I had been more bullish on which I have now become more bearish about, and some I had been more bearish on I have become more bullish. My last two articles were about stocks I recently sold (Bank of New York Mellon (BK) and Sysco Corporation (SYY)). This article will be about a stock in which my sentiment changed in the other direction and I bought: AmerisourceBergen.
I have written about AmerisourceBergen one time previously in early 2019. It was one of my first public articles where I used what I call a "Full-Cycle Analysis", though I mostly chose to ignore the results of the analysis at the time because I questioned whether ABC could continue to grow earnings at 10% per year with GDP likely growing far less than that over the next decade, and I suggested a recession buy price for ABC of $61 in that article. Several months later when I reviewed ABC again in the Cyclical Investor's Club, I was more generous and I changed the recession buy price to $72.00. During the March sell-off, the stock bottomed at $72.06, so, while my updated estimate was close, it didn't trigger a sale and I missed buying near the bottom of the recession for this stock.
Since March, we have had both a
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